Ratifiability of Efficient Collusive Mechanisms in Second-Price Auctions with Participation Costs

Guofu Tan and Okan Yilankaya

No 05.15, IEPR Working Papers from Institute of Economic Policy Research (IEPR)

Abstract: We investigate whether efficient collusive bidding mechanisms are affected by potential information leakage from bidders’ decisions to participate in them within the independent private values setting. We apply the concept of ratifiability introduced by Cramton and Palfrey (1995) and show that when the seller uses a second-price auction with participation costs, the standard efficient cartel mechanisms such as preauction knockouts analyzed in the literature will not be ratified by cartel members. A high-value bidder benefits from vetoing the cartel mechanism since doing so sends a credible signal that she has high value, which in turn discourages other bidders from participating in the seller’s auction.

Keywords: Auctions; collusion; ratifiability (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2005-02
New Economics Papers: this item is included in nep-com and nep-gth
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Ratifiability of efficient collusive mechanisms in second-price auctions with participation costs (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:scp:wpaper:05-15

Access Statistics for this paper

More papers in IEPR Working Papers from Institute of Economic Policy Research (IEPR) Contact information at EDIRC.
Bibliographic data for series maintained by ().