Optimal Auctions when a seller is bound to sell to collusive bidders (new version of "using lotteries...")

Nicolas Gruyer
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Nicolas Gruyer: LEEA (air transport economics laboratory), ENAC

No 6, Economics Working Papers from LEEA (air transport economics laboratory), ENAC (french national civil aviation school)

Abstract: I consider optimal auctions for a seller who is bound to sell a single item to one of two potential buyers, organized in a `well-coordinated' cartel. I show that, even though the seller cannot deter collusion, he can optimally accommodate it by employing a simple mechanism which imposes an inefficient allocation on the bidders unless they pay a sufficiently high amount to avoid it.

Keywords: auctions; optimal auctions; collusion; cartel; mechanism design; auction theory (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2008-06-01
New Economics Papers: this item is included in nep-com and nep-cta
Note: Type of Document - pdf; pages: 21.
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Persistent link: https://EconPapers.repec.org/RePEc:enc:abcdef:auction6

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