Optimal Collusion-Proof Auctions

Yeon-Koo Che and Jinwoo Kim ()

MPRA Paper from University Library of Munich, Germany

Abstract: We study an optimal collusion-proof auction in an environment where subsets of bidders may collude not just on their bids but also on their participation. Despite their ability to collude on participation, informational asymmetry facing the potential colluders can be exploited significantly to weaken their collusive power. The second-best auction --- i.e., the optimal auction in a collusion-free environment --- can be made collusion-proof, if at least one bidder is not collusive, or there are multiple bidding cartels, or the second-best outcome involves a nontrivial probability of the object not being sold. In case the second-best outcome is not weak collusion-proof implementable, we characterize an optimal collusion-proof auction. This auction involves nontrivial exclusion of collusive bidders --- i.e., the object is not sold to any collusive bidder with positive probability.

JEL-codes: D4 D8 (search for similar items in EconPapers)
Date: 2007-09-06
New Economics Papers: this item is included in nep-com and nep-gth
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Optimal collusion-proof auctions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:6098

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