Comparing competition and collusion: a numerical approach
Collusion is a serious problem in many procurement auctions. In this research, I study a model of first price sealed bid procurement auctions with asymmetric bidders. I demonstrate that the equilibrium to the model is unique and describe three algorithms that can be used to compute the inverse equilibrium bid functions. I then use the computational algorithms to compare competitive and collusive bidding. The algorithms are useful for structural estimation of auction models and for assessing the damages from bid-rigging.
Volume (Year): 18 (2001)
Issue (Month): 1 ()
|Note:||Received: January 14, 2000; revised version: February 28, 2001|
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