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Collusion Facilitating and Collusion Breaking Power of Simultaneous Ascending and Descending Price Auctions

Brown, Alexander L. and Plott, Charles R. and Sullivan, Heidi J. (2009) Collusion Facilitating and Collusion Breaking Power of Simultaneous Ascending and Descending Price Auctions. Economic Inquiry, 47 (3). pp. 395-424. ISSN 0095-2583. https://resolver.caltech.edu/CaltechAUTHORS:20140128-105141055

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Abstract

This article demonstrates that a robust, tacit collusion evolves quickly in a “collusion incubator” environment, but is destroyed by the simultaneous, descending price auction. Theories of collusion-producing behavior, along with the detail of the states on which strategies are conditioned, lead to a deeper understanding of how tacit collusion evolves and its necessary conditions. These theories explain how the descending price auction destroys the collusion. The experiments proceed by conducting simultaneous ascending price auctions in the collusion incubator. Then, once the tacit collusion developed, changing to the descending auction. The change moved prices from collusive levels to near competitive levels.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1111/j.1465-7295.2008.00153.xDOIArticle
ORCID:
AuthorORCID
Brown, Alexander L.0000-0002-5582-5304
Additional Information:© 2008 Western Economic Association International. Online Early publication July 9, 2008. The financial support of the National Science Foundation, the Caltech Laboratory for Experimental Economics and Political Science, and the Lee Center for Advanced Networking is gratefully acknowledged. The authors benefited from comments of Jin Li, Katerina Sherstyuk, Ian Krajbich, and an anonymous referee.
Funders:
Funding AgencyGrant Number
NSFUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Caltech Lee Center for Advanced NetworkingUNSPECIFIED
Issue or Number:3
Classification Code:JEL: C71, C92, D43, D44
Record Number:CaltechAUTHORS:20140128-105141055
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20140128-105141055
Official Citation:BROWN, A. L., PLOTT, C. R. and SULLIVAN, H. J. (2009), COLLUSION FACILITATING AND COLLUSION BREAKING POWER OF SIMULTANEOUS ASCENDING AND DESCENDING PRICE AUCTIONS. Economic Inquiry, 47: 395–424. doi: 10.1111/j.1465-7295.2008.00153.x
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43532
Collection:CaltechAUTHORS
Deposited By: Susan Vite
Deposited On:29 Jan 2014 16:51
Last Modified:03 Aug 2020 21:55

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