Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory

23 Pages Posted: 19 Oct 2003

See all articles by Natalia Fabra

Natalia Fabra

Universidad Carlos III de Madrid - Departmento de Economia

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.

Suggested Citation

Fabra, Natalia, Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory. Available at SSRN: https://ssrn.com/abstract=444349

Natalia Fabra (Contact Author)

Universidad Carlos III de Madrid - Departmento de Economia ( email )

E-28903 Getafe (Madrid)
Spain
+34-91 6249594 (Phone)
+34-91 6249329 (Fax)

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