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Weak Cartels and Collusion-Proof Auctions

Che, Yeon-Koo and Condorelli, Daniele and Kim, Jinwoo (2018) 'Weak Cartels and Collusion-Proof Auctions.' Journal of Economic Theory, 178. 398 - 435. ISSN 0022-0531

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Abstract

We study private value auctions in which bidders may collude without using sidepayments. In our model, bidders coordinate their actions to achieve an outcome that interim-Pareto dominates the noncooperative outcome. We characterize auctions that are collusion-proof in the sense that no such coordination opportunities exist, and show that the efficient and revenue maximizing auctions are not collusion-proof unless all bidders exhibit a concave distribution of valuations. We then solve for revenue maximizing collusion-proof auctions. If distributions of valuations are symmetric and single-peaked, the optimal selling mechanism is a standard auction with a minimum bid, followed by sequential negotiation in case no bidder bids above the minimum bid.

Item Type: Article
Uncontrolled Keywords: Weak cartels, Weakly collusion-proof auctions, Optimal auctions
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 06 Aug 2018 15:03
Last Modified: 22 Jan 2019 17:15
URI: http://repository.essex.ac.uk/id/eprint/21944

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