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

  • Chowdhury, Prabal Roy

We examine a simple model of collusion under a single-object second-price 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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File URL: http://www.sciencedirect.com/science/article/B6V84-4NNYJ55-2/1/5acd473a5eda8f17ac23a0b9377eb721
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 98 (2008)
Issue (Month): 3 (March)
Pages: 240-246

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Handle: RePEc:eee:ecolet:v:98:y:2008:i:3:p:240-246
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Yeon-Koo Che & Ian Gale, 1998. "Caps on Political Lobbying," Microeconomics 9809003, EconWPA.
  2. Arieh Gavious & Benny Moldovanu & Aner Sela, 2002. "Bid Costs and Endogenous Bid Caps," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 709-722, Winter.
  3. 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.
  4. 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.
  5. repec:cup:cbooks:9780521551847 is not listed on IDEAS
  6. repec:cup:cbooks:9780521536721 is not listed on IDEAS
  7. 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.
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