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| Author: | Rheet, K-E. |
| Title: | Collusion in the presence of externalities |
| Journal: | Journal of Industrial Economics
2007 : SEP, VOL. 55:3, p. 475-497 |
| Index terms: | auctions bidding cartels externalities price control |
| Language: | eng |
| Abstract: | This paper analyzes collusive bidder behavior in auctions with negative externalities demonstrating that the optimal bidding scheme is a partially-rigid. In the presence of externalities, a cartel has incentive at the same time to maximize returns and minimize the probability of sales. The analysis illustrates that a higher possibility of sales is associated with a more rigid bidding scheme. In a situation where the effect of externalities increases, the cartel prefers a low probability of sales to minimizing payment to the seller which leads to partially-rigid optimal collusive bidding scheme. |
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