Identifying Collusion in English Auctions

49 Pages Posted: 29 Feb 2016 Last revised: 9 Jul 2017

See all articles by Vadim Marmer

Vadim Marmer

University of British Columbia (UBC) - Vancouver School of Economics

Artyom A. Shneyerov

University of British Columbia (UBC) - Department of Economics

Uma Kaplan

Concordia University, Quebec

Date Written: February 26, 2016

Abstract

We develop a fully nonparametric identification framework and a test of collusion in ascending bid auctions. Assuming efficient collusion, we show that the underlying distributions of values can be identified despite collusive behaviour when there is at least one bidder outside the cartel. We propose a nonparametric estimation procedure for the distributions of values and a bootstrap test of the null hypothesis of competitive behaviour against the alternative of collusion. Our framework allows for asymmetric bidders, and the test can be performed on individual bidders. The test is applied to the Guaranteed Investment Certificate auctions conducted by US municipalities over the Internet. Despite the fact that there have been allegations of collusion in this market, our test does not detect deviations from competition. A plausible explanation of this finding is that the Internet auction design involves very limited information disclosure.

Keywords: English auctions, identification, collusion, nonparametric estimation

JEL Classification: C14, C57

Suggested Citation

Marmer, Vadim and Shneyerov, Artyom A. and Kaplan, Uma, Identifying Collusion in English Auctions (February 26, 2016). Available at SSRN: https://ssrn.com/abstract=2738789 or http://dx.doi.org/10.2139/ssrn.2738789

Vadim Marmer (Contact Author)

University of British Columbia (UBC) - Vancouver School of Economics ( email )

6000 Iona Dr
Vancouver, BC V6T 1L4
Canada

Artyom A. Shneyerov

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

Uma Kaplan

Concordia University, Quebec ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1MB
Canada

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