Collusion mechanisms in procurement auctions: An experimental investigation
Collusive agreements are often observed in procurement auctions. They are probably more easily achieved when competitors’ costs are easily estimated. If, however, the individual costs of bidders are private information, effective ring formation is difficult to realize. We compare experimentally different coordination mechanisms in a first-price procurement auction in how they promote the prospects of collusive arrangements. One mechanism allows bidders to coordinate by means of unrestricted pre-play communication. The second one enables bidders to restrict their bidding range and the last one gives them the opportunity to implement mutual shareholding. According to our results firstprice procurement is quite collusion-proof when allowing for the latter two coordination mechanisms whereas, on average, pre-play communication increases bidders' profits.
|Date of creation:||Sep 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Kahlaische Strasse 10, D-07745 Jena|
Phone: +49-3641-68 65
Fax: +49-3641-68 69 90
Web page: http://www.econ.mpg.de/
More information through EDIRC
|Order Information:|| Web: http://www.econ.mpg.de/english/research/ESI/discuss.php Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guth, W. & Peleg, B., 1993.
"On Ring Formation in Auctions,"
9357, Tilburg - Center for Economic Research.
- McAfee, R. Preston & McMillan, John., 1990.
726, California Institute of Technology, Division of the Humanities and Social Sciences.
- Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation for Research in Economics, Yale University.
- Kwasnica, Anthony M., 2000. "The choice of cooperative strategies in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 323-346, July.
- Mireia Jofre-Bonet & Martin Pesendorfer, 2003.
"Estimation of a Dynamic Auction Game,"
Econometric Society, vol. 71(5), pages 1443-1489, 09.
- Isaac, R. Mark & Walker, James M., 1985. "Information and conspiracy in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 6(2), pages 139-159, June.
- Jofre-Bonet, Mireia & Pesendorfer, Martin, 2000. "Bidding behavior in a repeated procurement auction: A summary," European Economic Review, Elsevier, vol. 44(4-6), pages 1006-1020, May.
- Holt, Charles A, Jr, 1980. "Competitive Bidding for Contracts under Alternative Auction Procedures," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 433-45, June.
- Susan I. Cohen & Martin Loeb, 1990. "Implicit Cost Allocation and Bidding for Contracts," Management Science, INFORMS, vol. 36(9), pages 1133-1138, September.
- Fehl, Ulrich & Guth, Werner, 1987. "Internal and external stability of bidder cartels in auctions and public tenders: A comparison of pricing rules," International Journal of Industrial Organization, Elsevier, vol. 5(3), pages 303-313.
When requesting a correction, please mention this item's handle: RePEc:esi:discus:2006-14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karin Richter)The email address of this maintainer does not seem to be valid anymore. Please ask Karin Richter to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.