Abstract
We show that in simple environments, a bidding ring operating at a first-price sealed-bid auction cannot achieve any gains relative to non-cooperative bidding if the ring is unable to control the bids that its members submit at the auction. This contrasts with results for the case in which the ring can control its members’ bids or prevent all but one of the ring members from participating in the auction. Numerical examples suggest that this result extends to some more complex environments. The analytic results use linear programming techniques that have potential applications to a number of other economic problems.
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The authors thank the National Science Foundation for support under grant SES-0849349. We thank seminar participants at INFORMS 2009, Andrew Born, Peter Franklin, Bob Marshall, John Min, and Jim Smith for helpful comments.
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Lopomo, G., Marx, L.M. & Sun, P. Bidder collusion at first-price auctions. Rev Econ Design 15, 177–211 (2011). https://doi.org/10.1007/s10058-010-0104-9
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DOI: https://doi.org/10.1007/s10058-010-0104-9