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Collusion via Resale

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  • Garratt, Rodney

Abstract

The English auction is susceptible to tacit collusion when post-auction inter-bidder resale is allowed. We show this by constructing equilibria where, with positive probability, one bidder wins the auction without any competition and divides the spoils by optimally reselling the good to the other bidders. These equilibria interim Pareto dominate (among bidders) the standard value-bidding equilibrium, without requiring the bidders to make any commitment on bidding behavior or post-bidding spoil-division.

Suggested Citation

  • Garratt, Rodney, 2008. "Collusion via Resale," Bonn Econ Discussion Papers 20/2008, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:202008
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    References listed on IDEAS

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    More about this item

    Keywords

    English auction; resale; collusion;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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