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Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory

Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory Within an infinitely repeated game, I compare the level and conduct of collusion under uniform and discriminatory auctions. For this purpose, I characterize the optimal collusive schemes and sets of sustainable profits under these auction formats. I show that uniform auctions facilitate collusion more than discriminatory auctions: the optimal penal code is equally severe under the two formats; but bidders' deviation incentives are weaker in uniform auctions given that the pay‐off irrelevant bids can be used to relax the enforcement problem. This discussion is particularly relevant after the recent reforms in the electricity industry in England & Wales, and elsewhere. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Industrial Economics Wiley

Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory

The Journal of Industrial Economics , Volume 51 (3) – Sep 1, 2003

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References (31)

Publisher
Wiley
Copyright
Copyright © 2003 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0022-1821
eISSN
1467-6451
DOI
10.1111/1467-6451.00201
Publisher site
See Article on Publisher Site

Abstract

Within an infinitely repeated game, I compare the level and conduct of collusion under uniform and discriminatory auctions. For this purpose, I characterize the optimal collusive schemes and sets of sustainable profits under these auction formats. I show that uniform auctions facilitate collusion more than discriminatory auctions: the optimal penal code is equally severe under the two formats; but bidders' deviation incentives are weaker in uniform auctions given that the pay‐off irrelevant bids can be used to relax the enforcement problem. This discussion is particularly relevant after the recent reforms in the electricity industry in England & Wales, and elsewhere.

Journal

The Journal of Industrial EconomicsWiley

Published: Sep 1, 2003

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