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Collusion Via Resale

Rodney Garratt (), Thomas Troger and Charles Zheng

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: The English auction is susceptible to tacit collusion when post-auction inter-bidder resale is allowed. We show this by constructing equilibria where, with positive probability, one bidder wins the auction without any competition and divides the spoils by optimally reselling the good to the other bidders. These equilibria interim Pareto dominate (among bidders) the standard value-bidding equilibrium, without requiring the bidders to make any commitment on bidding behavior or post-bidding spoil-division.

Keywords: auction; resale; collusion; English auction (search for similar items in EconPapers)
JEL-codes: D40 (search for similar items in EconPapers)
Date: 2007-06-30
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-mic
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Published in Econometrica, July 2009, vol. 77 no. 4, pp. 1095-1136

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