Corruption and auctions

Paulo Monteiro and Flavio Menezes

Microeconomics from University Library of Munich, Germany

Abstract: We investigate the outcome of an auction where the auctioneer approaches one of the two existing bidders and offers an opportunity for him to match his opponent's bid in exchange for a bribe. In particular, we examine two types of corruption arrangements. In the first case, the auctioneer approaches the winner to offer the possibility of a reduction in his bid to match the loser's bid in exchange for a bribe. In the second arrangement, the auctioneer approaches the loser and offers him the possibility of matching the winner's bid in exchange for a bribe. While oral auctions are corruption free under the two arrangements, corruption affects both bidding behavior, efficiency and the seller's expected revenue in a first-price auction.

Keywords: corruption; auction; efficiency (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2001-05-25
New Economics Papers: this item is included in nep-gth
Note: Type of Document - Postscript; prepared on PC; to print on PostScript; pages: 19
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Corruption and auctions (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0105002

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