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Optimal Auctions when a seller is bound to sell to collusive bidders (new version of "using lotteries ...")

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  • Nicolas Gruyer

    (LEEA (air transport economics laboratory), ENAC)

Abstract

I consider optimal auctions for a seller who is bound to sell a single item to one of two potential buyers, organized in a `well-coordinated' cartel. I show that, even though the seller cannot deter collusion, he can optimally accommodate it by employing a simple mechanism which imposes an inefficient allocation on the bidders unless they pay a sufficiently high amount to avoid it.

Suggested Citation

  • Nicolas Gruyer, 2008. "Optimal Auctions when a seller is bound to sell to collusive bidders (new version of "using lotteries ...")," Economics Working Papers 06, LEEA (air transport economics laboratory), ENAC (french national civil aviation school).
    • Handle: RePEc:enc:abcdef:auction6
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    References listed on IDEAS

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    More about this item

    Keywords

    auctions; optimal auctions; collusion; cartel; mechanism design; auction theory;
    All these keywords.

    JEL classification:

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

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