Summary.
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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Received: January 14, 2000; revised version: February 28, 2001
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Bajari, P. Comparing competition and collusion: a numerical approach. Econ Theory 18, 187–205 (2001). https://doi.org/10.1007/PL00004128
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DOI: https://doi.org/10.1007/PL00004128