Measurement of Collusion in Open Ascending Price Auctions in Agricultural Commodity Markets

Abstract

This paper derives a method of measuring the degree of collusion among the bidders in an open ascending repetitive price auction in agricultural commodity markets in India. This paper first derives the bidders’ behaviour’s theoretical structure and then a measure of collusion formation. Finally, the degree of the cartel has been computed using time series wholesale price data of potato and onion crops. This research’s findings are helpful for the study of the link between the supply of the agriculture commodity and the degree of collusion. Using the proposed method in this research, if the Agricultural Produce Market Committee (APMC) measures cartel for each market and publish periodically, it will help farmers choose the right market to sell the produce. The farmers would select the market where the degree of collusion is relatively lower. Identifying different small cartel groups at different times with respective to the supply of the agriculture commodity would help avoid the incidence of distress selling by farmers, which is the main hindrance in developing the farming community in India. JEL Classification: C7,D44,L1,L4,Q1

A model of collusion formation and measurement in the open ascending bid auctions in the agricultural markets

“…The sources of rigidity, are important to identify in our study. Testing of the collusion in the offline wholesale markets as well as in the online markets has to be done using the method (Das and Kapoor, 2021) [3]. The present paper interprets the method using some other useful Corollaries, lemmas and propositions.…”

“…The measurement of the degree of collusion is based on the method as proposed in the recently accepted article titled “Measurement of collusion in open ascending price auctions in agricultural commodity markets'’ (Accepted for publication at the Studies in Microeconomics in 2021). The working papers can be found at (Das and Kapoor, 2021).…”