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Controlling collusion in auctions: The Role of ceilings and reserve prices

Author

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  • Prabal Roy Chowdhury

    (Indian Statistical Institute, New Delhi)

Abstract

We examine a simple model of collusion under a single-object secondprice auction. Under the appropriate parameter conditions, in particular as long as collusion is neither too easy, nor too difficult, we find that the optimal policy involves both an effective ceiling, as well as a reserve price set at the lowest bidder valuation.

Suggested Citation

  • Prabal Roy Chowdhury, 2007. "Controlling collusion in auctions: The Role of ceilings and reserve prices," Discussion Papers 07-02, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:07-02
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    File URL: http://www.isid.ac.in/~pu/dispapers/dp07-02.pdf
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    References listed on IDEAS

    as
    1. Eso, Peter & Schummer, James, 2004. "Bribing and signaling in second price auctions," Games and Economic Behavior, Elsevier, vol. 47(2), pages 299-324, May.
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    4. Arieh Gavious & Benny Moldovanu & Aner Sela, 2002. "Bid Costs and Endogenous Bid Caps," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 709-722, Winter.
    5. Graham, Daniel A & Marshall, Robert C, 1987. "Collusive Bidder Behavior at Single-Object Second-Price and English Auctions," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1217-1239, December.
    6. Kirkegaard, Rene, 2005. "Participation fees vs. reserve prices in auctions with asymmetric or colluding buyers," Economics Letters, Elsevier, vol. 89(3), pages 328-332, December.
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    More about this item

    Keywords

    Auctions; ceilings; collusion; reserve prices;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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