OPTIMAL AUCTIONS WHEN A SELLER IS BOUND TO SELL TO COLLUSIVE BIDDERS* |
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Authors: | NICOLAS GRUYER |
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Affiliation: | LEEA‐ENAC, 7 avenue Edouard Belin, BP4005, 31055 Toulouse Cedex 4, France. e‐mail:gruyer@recherche.enac.fr. |
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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. |
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