Tacit collusion and capacity withholding in repeated uniform price auctions

Emmanuel Dechenaux and Dan Kovenock

MPRA Paper from University Library of Munich, Germany

Abstract: This article analyzes tacit collusion in infinitely repeated multiunit uniform price auctions in a symmetric oligopolywith capacity-constrained firms.Under two popular definitions of the uniform price, when each firm sets a price-quantity pair, perfect collusion with equal sharing of profit is easier to sustain in the uniform price auction than in the corresponding discriminatory auction. Moreover, capacity withholding may be necessary to sustain this outcome. Even when firms may set bids that are arbitrary finite step functions of price-quantity pairs, in repeated uniform price auctions maximal collusion is attained with simple price-quantity strategies exhibiting capacity withholding.

Keywords: Auction; Capacity; Collusion; Electricity Market; Supply Function (search for similar items in EconPapers)
JEL-codes: D43 D44 L13 L41 L94 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (35)

Published in Rand Journal of Economics 4.38(2007): pp. 1044-1069

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Related works:
Journal Article: Tacit collusion and capacity withholding in repeated uniform price auctions (2007)
Working Paper: Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions (2005)
Working Paper: Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions (2005)
Working Paper: Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions (2005)
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