Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Monday, December 15, 2008

Optimal Auctions When a Seller is Bound to Sell to Collusive Bidders

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.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/12/optimal-auction.html

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