Inefficiency of Collusion at English Auctions
In its attempts to deter and prosecute big rigging, U.S. antitrust authorities have focused on sealed-bid procurements, rather than on ascending-bid auctions. One possible justification for this focus is the idea, supported by the existing theoretical literature, that collusion creates inefficiency at sealed-bid auctions, but not at ascending-bid auctions. We show when there is no pre-auction communication and the collusive mechanism satisfies ex-post budget balance, collusion does affect efficiency. In particular, any collusive mechanism that increases cartel members' expected payoffs relative to non-cooperative play results in inefficiency either in the allocation among cartel members or in the allocation between cartel and non-cartel bidders, or both.
Year of publication: |
2005
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Authors: | Giuseppe, Lopomo ; Marshall Robert C. ; M, Marx Leslie |
Published in: |
The B.E. Journal of Theoretical Economics. - De Gruyter, ISSN 1935-1704. - Vol. 5.2005, 1, p. 1-28
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Publisher: |
De Gruyter |
Saved in:
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