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

  • Nicolas Gruyer

    ()

    (LEEA (air transport economics laboratory), ENAC)

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    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.

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    File URL: http://gruyern.free.fr/wpaper/gruyerAuct08.pdf
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    Paper provided by LEEA (air transport economics laboratory), ENAC (french national civil aviation school) in its series Economics Working Papers with number 06.

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    Length: 21 pages
    Date of creation: 01 Jun 2008
    Date of revision:
    Handle: RePEc:enc:abcdef:auction6
    Note: Type of Document - pdf; pages: 21.
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    28. Owen R. Phillips & Dale J. Menkhaus & Kalyn T. Coatney, 2003. "Collusive Practices in Repeated English Auctions: Experimental Evidence on Bidding Rings," American Economic Review, American Economic Association, vol. 93(3), pages 965-979, June.
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