*I thank the Editor, anonymous referees and Jacques Crémer for helpful comments and suggestions. I bear sole responsibility for any remaining errors.
OPTIMAL AUCTIONS WHEN A SELLER IS BOUND TO SELL TO COLLUSIVE BIDDERS*
Article first published online: 24 NOV 2009
© 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 57, Issue 4, pages 835–850, December 2009
How to Cite
GRUYER, N. (2009), OPTIMAL AUCTIONS WHEN A SELLER IS BOUND TO SELL TO COLLUSIVE BIDDERS. The Journal of Industrial Economics, 57: 835–850. doi: 10.1111/j.1467-6451.2009.00397.x
- Issue published online: 24 NOV 2009
- Article first published online: 24 NOV 2009
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.