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Economic Theory

, Volume 18, Issue 1, pp 187–205 | Cite as

Comparing competition and collusion: a numerical approach

  • Patrick Bajari
Symposium Articles

Summary.

Collusion is a serious problem in many procurement auctions. In this research, I study a model of first price sealed bid procurement auctions with asymmetric bidders. I demonstrate that the equilibrium to the model is unique and describe three algorithms that can be used to compute the inverse equilibrium bid functions. I then use the computational algorithms to compare competitive and collusive bidding. The algorithms are useful for structural estimation of auction models and for assessing the damages from bid-rigging.

Keywords and Phrases: Asymmetric auction, Collusion. 
JEL Classification Numbers: C72, L41. 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2001

Authors and Affiliations

  • Patrick Bajari
    • 1
  1. 1.Department of Economics, Stanford University, Stanford, CA 94305-6072, USA (e-mail: bajari@stanford.edu) US

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