Working Papers, Department of Economics, Lund University
Bidding Rings: A Bargaining Approach
(), Manipushpak Mitra
() and Conan Mukherjee
Abstract: We address the issue of bidder ring formation in single
and multi-unit Vickrey auctions. We address this issue in a bargaining game
set up under the assumption that valuation of bidders is commonly known
only amongst themselves. In the single unit case, we show that the
equilibrium coalition structure can only be an order preserving r-ring,
that includes the winner and the top (r-1) losers. In the multiple units
case, we specify sufficient conditions for formation of an interesting
class of equilibrium coalition structures, which we call single winner ring
with free riding, where exactly one winner colludes with all the losers and
generates maximum possible bidders' surplus, and, depending on the
protocol, the remaining winners free ride either by staying alone or by
colluding in pairs.
Keywords: Bidding rings; Bargaining games; Coalition formation; Auctions; (follow links to similar papers)
JEL-Codes: C71; C72; C78; D44; L41; (follow links to similar papers)
28 pages, January 16, 2015, Revised January 17, 2016
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- This paper is forthcoming as:
Chatterjee, Kalyan, Manipushpak Mitra and Conan Mukherjee, 'Bidding Rings: A Bargaining Approach', Games and Economic Behavior.
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