Collusion enforcement in repeated first-price auctions

Wenzhang Zhang ()
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Wenzhang Zhang: School of Economics, Zhejiang University

Theoretical Economics, 2022, vol. 17, issue 4

Abstract: In the context of repeated first-price auctions, we explore how a bid-rigging cartel can simultaneously overcome the difficulty of soliciting truthful private information about valuations and the difficulty of enforcing its internal mechanism. Focusing on the class of trigger-strategy collusive agreements, we explicitly characterize the optimal collusive agreement for any given discount factor. Making use of the characterization, we also explore how a long-run seller can use a reserve price to fight the cartel.

Keywords: Collusion; bidding rings; first-price auctions; repeated games (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2022-11-22
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