Monday, December 15, 2008
Posted by D. Daniel Sokol
Nicolas Gruyer (LEEA (air transport economics laboratory), ENAC) considers Optimal Auctions When a Seller is Bound to Sell to Collusive Bidders in his latest working paper.
ABSTRACT: I consider optimal auctions for a seller who is bound to sell a single item to one of two potential buyers, organized in a `well-coordinated' cartel. I show that, even though the seller cannot deter collusion, he can optimally accommodate it by employing a simple mechanism which imposes an inefficient allocation on the bidders unless they pay a sufficiently high amount to avoid it.