Clustered bids in first-price auctions: Collusion or competition?

Adriano De Leverano

Economics Letters, 2023, vol. 233, issue C

Abstract: Clustering of the two most competitive bids in first-price auctions can be indicative of collusive behavior. However, it can also reflect non-cooperative strategies under complete information. I propose a simple procedure to distinguish between the two observationally equivalent explanations. This method requires the knowledge of winning bids and the determinants of the bid of the second most competitive bidder.

Keywords: Auctions; Collusion; Competition; Complete information (search for similar items in EconPapers)
JEL-codes: D44 H57 K21 L12 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523004196

DOI: 10.1016/j.econlet.2023.111393

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