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Comparing Competition and Collusion in Procurement Auctions: A Numerical Approach

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  • Patrick Bajari

Abstract

January 2000, Revised January 2001 Collusion is a serious problem in many procurement auctions. In this research, I study a model of first price sealed bid procurement auctions with asymmetric bidders. I demonstrate that the equilibrium to the model is unique and describe three algorithms that can be used to compute the inverse equilibrium bid functions. I then use the computational algorithms to compare competitive and collusive bidding. The algorithms are useful for structural estimation of auction models and for assessing the damages from bid-rigging.

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  • Patrick Bajari, "undated". "Comparing Competition and Collusion in Procurement Auctions: A Numerical Approach," Working Papers 00003, Stanford University, Department of Economics.
    • Handle: RePEc:wop:stanec:00003
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    File URL: http://www-econ.stanford.edu/faculty/workp/swp00003.pdf
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