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Identifying Collusion in English Auctions

Author

Listed:
  • Kaplan, Uma
  • Marmer, Vadim
  • Shneyerov, Artyom

Abstract

We develop a fully nonparametric identification framework and a test of collusion in ascending bid auctions. Assuming efficient collusion, we show that the underlying distributions of values can be identified despite collusive behaviour when there is at least one bidder outside the cartel. We propose a nonparametric estimation procedure for the distributions of values and a bootstrap test of the null hypothesis of competitive behaviour against the alternative of collusion. Our framework allows for asymmetric bidders, and the test can be performed on individual bidders. The test is applied to the Guaranteed Investment Certificate auctions conducted by US municipalities over the Internet. Despite the fact that there have been allegations of collusion in this market, our test does not detect deviations from competition. A plausible explanation of this finding is that the Internet auction design involves very limited information disclosure.

Suggested Citation

  • Kaplan, Uma & Marmer, Vadim & Shneyerov, Artyom, 2016. "Identifying Collusion in English Auctions," Microeconomics.ca working papers vadim_marmer-2016-3, Vancouver School of Economics, revised 08 Jul 2017.
  • Handle: RePEc:ubc:pmicro:vadim_marmer-2016-3
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    File URL: https://microeconomics.ca/archive/vadim_marmer/collusion06.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Daniel Hedblom & Brent R. Hickman & John A. List, 2019. "Toward an Understanding of Corporate Social Responsibility: Theory and Field Experimental Evidence," NBER Working Papers 26222, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    English auctions; identification; collusion; nonparametric estimation;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions

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