Munich Personal RePEc Archive

Is Collusion Proof Auction Expensive? Estimates from Highway Procurements

Aryal, Gaurab and Gabrielli, Maria F. (2012): Is Collusion Proof Auction Expensive? Estimates from Highway Procurements.

[img]
Preview
PDF
MPRA_paper_57353.pdf

Download (238kB) | Preview

Abstract

Collusion in auctions affects both revenue and efficiency and are prevalent. Yet, sellers do not use collusion-proof auctions as often as they should. Why is that? We find that one reason for this could be the cost of implementing efficient collusion-proof auctions. We use California highway procurements data, to estimate the cost of implementing collusion-proof auction. Our estimates show that cost must increase by at least 10.8% to ensure efficient outcome. The cost can sometimes be as high as 48.8% (depending on the size of bidding-ring in the data).

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.