Tacit collusion in repeated auctions

Skrzypacz, Andrzej; Hopenhayn, Hugo A.

doi:10.1016/s0022-0531(03)00128-5

Cited by 139 publications

(95 citation statements)

References 8 publications

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“…Recent examples of collusion in FP include infrastructure procurement Zona, 1993, andBoone et al, 2009) and school milk tenders Zona, 1999, andPesendorfer, 2000). Apparently, many cartels have been able to overcome the free-rider incentives in FP, possibly because repeated interaction renders collusion stable in FP (Blume and Heidhues, 2008, Abdulkadiroµ glu and Chung, 2003, Aoyagi, 2003, 2007, and Skrzypacz and Hopenhayn, 2004. Motivated by these examples, we focus on the toughest possible case for auctioneers, the one where cartel members do not have to fear that there will be defection from within the cartel and where side-payments are possible between cartel members (a "strong cartel"in McAfee and McMillan's (1992) terminology, and a "bid submission mechanism"in Marshall and Marx's (2007)).…”

Section: Introductionmentioning

confidence: 99%

Fighting collusion in auctions: An experimental investigation

Offerman

Onderstal

2011

International Journal of Industrial Organization

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The danger of collusion presents a serious challenge for auctioneers. In this paper, we compare the collusive properties of two standard auctions, the English auction and the …rst-price sealed-bid auction, and a lesser-known format, the Amsterdam (secondprice) auction. In the Amsterdam auction, the highest losing bidder earns a premium for stirring up the price. We study two settings: in one, all bidders can collude, and in another, only a subset is eligible. The experiments show that the Amsterdam auction triggers less collusion than the standard auctions. We compare experimental results to theoretical predictions, and provide an explanation where they di¤er.

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Section: Introductionmentioning

confidence: 99%

Fighting collusion in auctions: An experimental investigation

Offerman

Onderstal

2011

International Journal of Industrial Organization

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“…Athey and Bagwell (2001) show that if observable past prices act as public history on which subsequent collusion is coordinated, then first-best profit may be achieved without communication. Skrzypacz and Hopenhayn (2004) find, however, that the scope of collusion is constrained without explicit communication when firms have imperfect public monitoring on past actions. A potential benefit of communication is also suggested in a large and growing private-monitoring literature.…”

Section: Non-communicative Firmsmentioning

confidence: 90%

“…Compte (1998) and Kandori and Matsushima (1998) show that players can generate a public history, benefiting from communication. 38 Returning to our model, we follow Athey and Bagwell (2001) and establish a non-communicative APPE. Consider a price vector:…”

Section: Non-communicative Firmsmentioning

confidence: 99%

“…An important feature in recent theoretical work is that the state of firms' production costs is regarded as private information. Aoyagi (2003), Bagwell (2001, 2006), Athey et al (2004) and Skrzypacz and Hopenhayn (2004) develop models of this kind, where firms play a repeated Bertrand pricing game or repeated procurement auctions. 2 Despite their rich analyses of collusion, those theoretical models have given no attention to the possibility that the location private information is the hired agents who produce firms' outputs.…”

Section: Introductionmentioning

confidence: 99%

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Optimal collusion with internal contracting

Lee

2010

Games and Economic Behavior

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In this paper, we develop a model of collusion in which two firms play an infinitelyrepeated Bertrand game when each firm has a privately-informed agent. The colluding firms, fixing prices, allocate market shares based on the agent's information as to cost types. We emphasize that the presence of privately-informed agents may provide firms with a strategic opportunity to exploit an interaction between internal contracting and market-sharing arrangement: the contracts with agents may be used to induce firms' truthful communication in their collusion, and collusive market-share allocation may act to reduce the agents' information rents.Journal of Literature Classification numbers: C73, L13, L14.

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“…For repeated auctions, on the other hand, there has been a stream of recent work showing that collusion is possible through bid rotation schemes, even without side payments [7,8,9]. This paper attempts to establish a coordinative mechanism (that allows bidders to collude without side payment) as a solution to a Stackelberg game, through fully understanding the effect of commitments in a single-item first-price auction.…”

Section: Introductionmentioning

confidence: 99%

Commitment in First-Price Auctions

Ligett

2015

Lecture Notes in Computer Science

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We study a variation of the single-item sealed-bid first-price auction wherein one bidder (the leader) publicly commits to a strategy before the others submit their bids.We fully characterize the committed mixed strategy that is optimal for the leader, and find that the leader and the follower with the highest valuation strictly benefit from the commitment. We further show that compared with the simultaneous first-price auction, the leader's optimal commitment yields the same net utility benefit to each of the two highest-valued bidders. As a result, these two bidders' incentives are aligned, facilitating coordination and implementation of the commitment.

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Tacit collusion in repeated auctions

Cited by 139 publications

References 8 publications

Fighting collusion in auctions: An experimental investigation

Fighting collusion in auctions: An experimental investigation

Optimal collusion with internal contracting

Commitment in First-Price Auctions

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