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American Economic Review: Vol. 100 No. 3 (June 2010)

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A Study of the Internal Organization of a Bidding Cartel

Article Citation

Asker, John. 2010. "A Study of the Internal Organization of a Bidding Cartel." American Economic Review, 100(3): 724-62.

DOI: 10.1257/aer.100.3.724

Abstract

This paper examines bidding in over 1,700 knockout auctions used by a bidding cartel (or ring) of stamp dealers in the 1990s. The knockout was conducted using a variant of the model studied by Daniel Graham, Robert Marshall, and Jean-Francois Richard (1990). Following a reduced form examination of these data, damages, induced inefficiency, and the ring's benefit from colluding are estimated using a structural model in the spirit of Emmanuel Guerre, Isabelle Perrigne, and Quang Vuong (2000). A notable finding is that nonring bidders suffered damages that were of the same order of magnitude as those of the sellers. (JEL D43, D44, L12)

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Authors

Asker, John (NYU)

JEL Classifications

D43: Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
D44: Auctions
L12: Monopoly; Monopolization Strategies


American Economic Review


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