Elsevier

Journal of Economic Theory

Volume 133, Issue 1, March 2007, Pages 374-402
Journal of Economic Theory

Bidder collusion

https://doi.org/10.1016/j.jet.2005.12.004 Get rights and content

Abstract

We analyze bidder collusion at first-price and second-price auctions. Our focus is on less than all-inclusive cartels and collusive mechanisms that do not rely on auction outcomes. We show that cartels that cannot control the bids of their members can eliminate all ring competition at second-price auctions, but not at first-price auctions. At first-price auctions, when the cartel cannot control members’ bids, cartel behavior involves multiple cartel bids. Cartels that can control bids of their members can suppress all ring competition at both second-price and first-price auctions; however, shill bidding reduces the profitability of collusion at first-price auctions.

References (23)

  • J. Hirshleifer et al.

    The Analytics of Uncertainty and Information

    (1993)
  • Cited by (111)

    • Perfect bidder collusion through bribe and request

      2021, Games and Economic Behavior
    • Coordination in the Fight against Collusion

      2024, American Economic Journal: Microeconomics
    View all citing articles on Scopus
    View full text