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decides a level of effort and, when firewalls are absent, a level of collusion, modelled as a costly and unproductive … are steeper. This means that the level of effort is higher and may compensate the (ex post) inefficiency of collusion …
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In this paper I study two methods often used in public procurement to deal with the risk that the winning bidder may default on his bid: augmenting the standard first price auction with an ex-post verification of the responsiveness of the bids and using an average bid auction. I show that when...
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