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Optimal Auctions when a seller is bound to sell to collusive bidders (new version of "using lotteries ...")

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  • Nicolas Gruyer

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    (LEEA (air transport economics laboratory), ENAC)

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    Abstract

    I consider optimal auctions for a seller who is bound to sell a single item to one of two potential buyers, organized in a `well-coordinated' cartel. I show that, even though the seller cannot deter collusion, he can optimally accommodate it by employing a simple mechanism which imposes an inefficient allocation on the bidders unless they pay a sufficiently high amount to avoid it.

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    Bibliographic Info

    Paper provided by LEEA (air transport economics laboratory), ENAC (french national civil aviation school) in its series Economics Working Papers with number 06.

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    Length: 21 pages
    Date of creation: 01 Jun 2008
    Date of revision:
    Handle: RePEc:enc:abcdef:auction6

    Note: Type of Document - pdf; pages: 21.
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    Keywords: auctions; optimal auctions; collusion; cartel; mechanism design; auction theory;

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