Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory |
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Authors: | Natalia Fabra |
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Institution: | Universidad Carlos III de Madrid, Madrid, Spain.;  |
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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. |
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