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Weak cartels and collusion-proof auctions
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Che, Yeon-Koo, Condorelli, Daniele and Kim, Jinwoo (2018) Weak cartels and collusion-proof auctions. Journal of Economic Theory, 178 . pp. 398-435. doi:10.1016/j.jet.2018.09.005 ISSN 0022-0531.
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Official URL: http://dx.doi.org/10.1016/j.jet.2018.09.005
Abstract
We study private value auctions in which bidders may collude without using side-payments. 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: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce |
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| Divisions: | Faculty of Social Sciences > Economics | ||||||||
| Library of Congress Subject Headings (LCSH): | Cartels -- Research -- Mathematical models, Auctions -- Mathematical models | ||||||||
| Journal or Publication Title: | Journal of Economic Theory | ||||||||
| Publisher: | Academic Press | ||||||||
| ISSN: | 0022-0531 | ||||||||
| Official Date: | November 2018 | ||||||||
| Dates: |
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| Volume: | 178 | ||||||||
| Page Range: | pp. 398-435 | ||||||||
| DOI: | 10.1016/j.jet.2018.09.005 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Date of first compliant deposit: | 22 January 2020 | ||||||||
| Date of first compliant Open Access: | 17 March 2020 | ||||||||
| RIOXX Funder/Project Grant: |
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