Efficient collusion in optimal auctions
We study collusion in an IPV auction with binary type spaces. Collusion is organized by a third-party than can manipulate participation decisions. We characterize the optimal response of the seller to different threats of collusion among the bidders. We show that, contrary to the prevailing view that assymmetric information imposes transaction costs in side-contracting, collusion in the optimal auction is efficient when the third-party can implement monetary transfers as well as when it can implement monetary transfers and reallocations of the good. The threat of non-participation in the auction by a subset of bidders is crucial in constraining the seller's profit.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0033) 4 76 82 54 39
Web page: http://www.grenoble.inra.fr/
More information through EDIRC
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.:
- d'ASPREMONT, Claude & GERARD-VARET, Louis-André, .
"Incentives and incomplete information,"
CORE Discussion Papers RP
-354, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cramton Peter C. & Palfrey Thomas R., 1995.
"Ratifiable Mechanisms: Learning from Disagreement,"
Games and Economic Behavior,
Elsevier, vol. 10(2), pages 255-283, August.
- Cramton, Peter C. & Palfrey, Thomas R., 1990. "Ratifiable Mechanisms: Learning from Disagreement," Working Papers 731, California Institute of Technology, Division of the Humanities and Social Sciences.
- Peter Cramton & Thomas R. Palfrey, 1995. "Ratifiable Mechanisms: Learning from Disagreement," Papers of Peter Cramton 95geb, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
- Doh Shin Jeon & Domenico Menicucci, 2001.
"Optimal second-degree price discrimination and arbitrage: On the role of asymetric information among buyers,"
Economics Working Papers
624, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2005.
- Doh-Shin Jeon & Domenico Menicucci, 2005. "Optimal Second-Degree Price Discrimination and Arbitrage: On the Role of Asymmetric Information Among Buyers," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 337-360, Summer.
- Doh-Shin Jeon & Domenico Menicucci, 2001. "Optimal Second-degree Price Discrimination and Arbitrage: On the Role of Asymmetric Information among Buyers," Working Papers 21, Barcelona Graduate School of Economics.
- Gregory Pavlov, 2006. "Colluding on Participation Decisions," Boston University - Department of Economics - Working Papers Series WP2006-030, Boston University - Department of Economics.
- Baldwin, Laura H & Marshall, Robert C & Richard, Jean-Francois, 1997.
"Bidder Collusion at Forest Service Timber Sales,"
Journal of Political Economy,
University of Chicago Press, vol. 105(4), pages 657-99, August.
- Kenneth Hendricks & Robert Porter, 1989.
"Collusion in Auctions,"
817, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- 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.
- Armstrong, Mark & Rochet, Jean-Charles, 1999. "Multi-dimensional screening:: A user's guide," European Economic Review, Elsevier, vol. 43(4-6), pages 959-979, April.
- McAfee, R. Preston & McMillan, John., 1990.
726, California Institute of Technology, Division of the Humanities and Social Sciences.
- Porter, Robert H & Zona, J Douglas, 1993.
"Detection of Bid Rigging in Procurement Auctions,"
Journal of Political Economy,
University of Chicago Press, vol. 101(3), pages 518-38, June.
- Laffont, J.J. & Martimort, D., 1996.
"Collusion Under Asymmetric Information,"
95.389, Toulouse - GREMAQ.
- Yeon-Koo Che & Jinwoo Kim, 2006.
"Robustly Collusion-Proof Implementation,"
Econometric Society, vol. 74(4), pages 1063-1107, 07.
- Laffont, J.J. & Martimort, D., 1995.
"Collusion and Delegation,"
95.397, Toulouse - GREMAQ.
- Dilip Mookherjee & Masatoshi Tsumagari, 2004. "The Organization of Supplier Networks: Effects of Delegation and Intermediation," Econometrica, Econometric Society, vol. 72(4), pages 1179-1219, 07.
- Mailath, George J. & Zemsky, Peter, 1991. "Collusion in second price auctions with heterogeneous bidders," Games and Economic Behavior, Elsevier, vol. 3(4), pages 467-486, November.
- Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 381-411, July.
When requesting a correction, please mention this item's handle: RePEc:gbl:wpaper:200607. 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: (Agnès Vertier)
If references are entirely missing, you can add them using this form.