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Clustered bids in first-price auctions: Collusion or competition?

Author

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  • De Leverano, Adriano

Abstract

Clustering of the two most competitive bids in first-price auctions can be indicative of collusive behavior. However, it can also reflect non-cooperative strategies under complete information. I propose a simple procedure to distinguish between the two observationally equivalent explanations. This method requires the knowledge of winning bids and the determinants of the bid of the second most competitive bidder.

Suggested Citation

  • De Leverano, Adriano, 2023. "Clustered bids in first-price auctions: Collusion or competition?," Economics Letters, Elsevier, vol. 233(C).
    • Handle: RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523004196
    DOI: 10.1016/j.econlet.2023.111393
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    More about this item

    Keywords

    Auctions; Collusion; Competition; Complete information;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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