Hostname: page-component-7b9c58cd5d-v2ckm Total loading time: 0 Render date: 2025-03-15T22:23:46.889Z Has data issue: false hasContentIssue false
  • English
  • Français

Collusion Without Conspiracy: An Experimental Study of One-Sided Auctions

Published online by Cambridge University Press:  14 March 2025

Katerina Sherstyuk
Katerina Sherstyuk*
Affiliation:
Department of Economics, University of Melbourne, Parkville, Victoria 3052, Australia
*
email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The study investigates collusion-nonfacilitating features of one-sided auctions. We report the results of oral nondescending bid auction experiments in which the strict bid improvement rule was absent, and compare them with the results of sealed bid auction experiments. In the sealed bid experiments the outcomes converged to the competitive equilibrium. In the oral auctions, collusive outcomes emerged and were sustained with bidders using bid matching strategies. We conclude that oral auctions provide opportunities for tacit coordination and collusion enforcement that do not exist under the sealed bid. Therefore, the strict bid improvement rule becomes critical for breaking collusion.

Keywords

auction experimentstacit collusion

JEL classification

D44: Auctions C92: Laboratory, Group Behavior
Type
Research Article
Information
Experimental Economics , Volume 2 , Issue 1 , August 1999 , pp. 59 - 75
Copyright
Copyright © 1999 Economic Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Clauser, L. and Plott, C.R. (1993). “On the Anatomy of the ‘Nonfacilitating’ Features of the Double Auction Institution in Conspiratorial Markets.” In Friedman, D. and Rust, J. (eds.), The Double Auction Market (SFI Studies in the Sciences of Complexity, Proc. V 14). Addison-Wesley, chap. 12.Google Scholar
Graham, D.A. and Marshall, R.C. (1987). “Collusive Bidder Behavior at Single-Object Second Price and English Auctions.” Journal of Political Economy. 95, 1217–1239.CrossRefGoogle Scholar
Graham, D.A., Marshall, R.C., and Richard, J.-F. (1990). “Differential Payments Within a Bidder Coalition and the Shapley Value.” The American Economic Review. 80, 493–510.Google Scholar
Grether, D.M. and Plott, C.R. (1984). “The Effects of Market Practices in Oligopolistic Markets: An Experimental Examination of the Ethyl Case.” Economic Inquiry. 22, 479–507.CrossRefGoogle Scholar
Holt, C.A. (1995). “Industrial Organization: A Survey of Laboratory Research.” In Kagel, J. and Roth, R. (eds.), Handbook of Experimental Economics. Princeton University Press, pp. 349–443.CrossRefGoogle Scholar
Holt, C.A. and Scheffman, D.T. (1987). “Facilitating Practices: The Effects of Advance Notice and Best-Price Policies.” Rand Journal of Economics. 18, 187–197.CrossRefGoogle Scholar
Isaac, M.R. and Plott, C.R. (1981). “The Opportunity for Conspiracy in Restraint of Trade.” Journal of Economic Behavior and Organization. 2, 1–30.CrossRefGoogle Scholar
Isaac, M.R., Ramey, V., and Williams, A.W. (1984). “The Effects of Market Organization on Conspiracies in Restraint of Trade.” Journal of Economic Behavior and Organization. 5, 191–222.CrossRefGoogle Scholar
Isaac, M.R. and Walker, J. (1985). “Information and Conspiracy in Sealed Bid Auctions.” Journal of Economic Behavior and Organization. 6, 139–159.CrossRefGoogle Scholar
Salop, S.C. (1986). “Practices that (Credibly) Facilitate Oligopoly Co-ordination.” In Stiglitz, J.E. and Mathewson, G.F. (eds.), New Developments in the Analysis of Market Structure. The MIT Press, pp. 265–290.CrossRefGoogle Scholar
Siegel, S. and Castellan, N.J. Jr. (1988). Nonparametric Statistics for the Behavioral Sciences. McGraw-Hill Book Company.Google Scholar
Smith, V.L. (1964). “Effect of Market Organization on Competitive Equilibrium.” Quarterly Journal of Economics. 78, 181–201.CrossRefGoogle Scholar
Walker, J.M. and Williams, A.W. (1988). “Market Behavior in Bid, Offer, and Double Auctions: A Reexamination.” Journal of Economic Behavior and Organization. 9, 301–314.CrossRefGoogle Scholar