Comparing competition and collusion: a numerical approach

Patrick Bajari ()
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Patrick Bajari: Department of Economics, Stanford University, Stanford, CA 94305-6072, USA

Economic Theory, 2001, vol. 18, issue 1, 187-205

Abstract: Collusion is a serious problem in many procurement auctions. In this research, I study a model of first price sealed bid procurement auctions with asymmetric bidders. I demonstrate that the equilibrium to the model is unique and describe three algorithms that can be used to compute the inverse equilibrium bid functions. I then use the computational algorithms to compare competitive and collusive bidding. The algorithms are useful for structural estimation of auction models and for assessing the damages from bid-rigging.

Keywords: Asymmetric auction; Collusion. (search for similar items in EconPapers)
JEL-codes: C72 L41 (search for similar items in EconPapers)
Date: 2001-04-11
Note: Received: January 14, 2000; revised version: February 28, 2001
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Citations: View citations in EconPapers (72)

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