Optimal Auctions when a seller is bound to sell to collusive bidders (new version of "using lotteries ...")
AbstractI 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by LEEA (air transport economics laboratory), ENAC (french national civil aviation school) in its series Economics Working Papers with number 06.
Length: 21 pages
Date of creation: 01 Jun 2008
Date of revision:
Note: Type of Document - pdf; pages: 21.
Contact details of provider:
Postal: 7, avenue Edouard Belin, BP 54005, 31055 Toulouse cedex 4
Fax: +33 (0) 5 62 17 40 17
Web page: http://www.enac.fr/recherche/leea/
More information through EDIRC
auctions; optimal auctions; collusion; cartel; mechanism design; auction theory;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-01 (All new papers)
- NEP-COM-2008-12-01 (Industrial Competition)
- NEP-CTA-2008-12-01 (Contract Theory & Applications)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marshall, R.C. & Richard J.F., 1995.
"Bider Collusion at Forest Service Timber Sales,"
7-95-3, Pennsylvania State - Department of Economics.
- Yeon-Koo Che & Jinwoo Kim, 2005.
"Robustly collusion-proof implementation,"
0506-12, Columbia University, Department of Economics.
- Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
- Aoyagi, Masaki, 2003. "Bid rotation and collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 112(1), pages 79-105, September.
- Drew Fudenberg & David K. Levine & Eric Maskin, 1994.
"The Folk Theorem with Imperfect Public Information,"
Levine's Working Paper Archive
394, David K. Levine.
- Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994. "The Folk Theorem with Imperfect Public Information," Econometrica, Econometric Society, vol. 62(5), pages 997-1039, September.
- Fudenberg, D. & Levine, D.K. & Maskin, E., 1989. "The Folk Theorem With Inperfect Public Information," Working papers 523, Massachusetts Institute of Technology (MIT), Department of Economics.
- Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 2058, David K. Levine.
- McAfee, R. Preston & McMillan, John., 1990.
726, California Institute of Technology, Division of the Humanities and Social Sciences.
- J. Riley & E. Maskin, 1981.
"Optimal Auctions with Risk Averse Buyers,"
311, Massachusetts Institute of Technology (MIT), Department of Economics.
- Robert H. Porter & J. Douglas Zona, 1997.
"Ohio School Milk Markets: An Analysis of Bidding,"
NBER Working Papers
6037, National Bureau of Economic Research, Inc.
- Susan Athey & Kyle Bagwell, 1999.
"Optimal Collusion with Private Information,"
99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
- d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979.
"Incentives and incomplete information,"
Journal of Public Economics,
Elsevier, vol. 11(1), pages 25-45, February.
- Andreas Blume & Paul Heidhues, 2008. "Modeling Tacit Collusion in Auctions," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(1), pages 163-184, March.
- Cramton, Peter C. & Palfrey, Thomas R., 1986.
"Cartel Enforcement with Uncertainty About Costs,"
619, California Institute of Technology, Division of the Humanities and Social Sciences.
- Jullien, Bruno, 2000.
"Participation Constraints in Adverse Selection Models,"
Journal of Economic Theory,
Elsevier, vol. 93(1), pages 1-47, July.
- Jullien, Bruno, 1997. "Participation Constraints in Adverse Selection Models," IDEI Working Papers 67, Institut d'Économie Industrielle (IDEI), Toulouse.
- Dequiedt, Vianney, 2007.
"Efficient collusion in optimal auctions,"
Journal of Economic Theory,
Elsevier, vol. 136(1), pages 302-323, September.
- Vernon A. Mund, 1960. "Identical Bid Prices," Journal of Political Economy, University of Chicago Press, vol. 68, pages 150.
- Paul Milgrom & Robert J. Weber, 1981.
"A Theory of Auctions and Competitive Bidding,"
447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jean-Jacques Laffont & David Martimort, 2000.
"Mechanism Design with Collusion and Correlation,"
Econometric Society, vol. 68(2), pages 309-342, March.
- Lucia Quesada, 2003. "Modeling collusion as an informed principal problem," Game Theory and Information 0304002, EconWPA.
- Owen R. Phillips & Dale J. Menkhaus & Kalyn T. Coatney, 2003. "Collusive Practices in Repeated English Auctions: Experimental Evidence on Bidding Rings," American Economic Review, American Economic Association, vol. 93(3), pages 965-979, June.
- Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 381-411, July.
- Maggi G. & Rodriguez-Clare A., 1995. "On Countervailing Incentives," Journal of Economic Theory, Elsevier, vol. 66(1), pages 238-263, June.
- Gregory Pavlov, 2006. "Colluding on Participation Decisions," Boston University - Department of Economics - Working Papers Series WP2006-030, Boston University - Department of Economics.
- Laffont, J.J. & Martimort, D., 1996.
"Collusion Under Asymmetric Information,"
95.389, Toulouse - GREMAQ.
- Hopenhayn, Hugo A. & Skrzypacz, Andrzej, 2001.
"Tacit Collusion in Repeated Auctions,"
1698r2, Stanford University, Graduate School of Business.
- Dilip Mookherjee & Masatoshi Tsumagari, 2004. "The Organization of Supplier Networks: Effects of Delegation and Intermediation," Econometrica, Econometric Society, vol. 72(4), pages 1179-1219, 07.
- Riley, John G & Samuelson, William F, 1981.
American Economic Review,
American Economic Association, vol. 71(3), pages 381-92, June.
- McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
- Eshien Chong & Freddy Huet & Stéphane Saussier & Faye Steiner, 2006. "Public-Private Partnerships and Prices: Evidence from Water Distribution in France," Review of Industrial Organization, Springer, vol. 29(1), pages 149-169, September.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- Hay, George A & Kelley, Daniel, 1974. "An Empirical Survey of Price Fixing Conspiracies," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 13-38, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.