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Controlling collusion in auctions: The Role of ceilings and reserve prices

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  • Prabal Roy Chowdhury

    ()
    (Indian Statistical Institute, New Delhi)

Abstract

We examine a simple model of collusion under a single-object secondprice auction. Under the appropriate parameter conditions, in particular as long as collusion is neither too easy, nor too difficult, we find that the optimal policy involves both an effective ceiling, as well as a reserve price set at the lowest bidder valuation.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 07-02.

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Length: 11 pages
Date of creation: Apr 2007
Date of revision:
Handle: RePEc:ind:isipdp:07-02

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Keywords: Auctions; ceilings; collusion; reserve prices;

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  1. Peter Eso & James Schummer, 2002. "Bribing and Signalling in Second Price Auctions," Discussion Papers 1357, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Yeon-Koo Che & Ian Gale, 1998. "Caps on Political Lobbying," Microeconomics 9809003, EconWPA.
  3. Kirkegaard, Rene, 2005. "Participation fees vs. reserve prices in auctions with asymmetric or colluding buyers," Economics Letters, Elsevier, vol. 89(3), pages 328-332, December.
  4. Graham, Daniel A & Marshall, Robert C, 1987. "Collusive Bidder Behavior at Single-Object Second-Price and English Auctions," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1217-39, December.
  5. Gavious, Arieh & Moldovanu, Benny & Sela, Aner, 2000. "Bid Costs and Endogenous Bid Caps," Sonderforschungsbereich 504 Publications 01-19, Sonderforschungsbereich 504, Universit├Ąt Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  6. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521551847, October.
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