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Collusion and the Choice of Auction
Marc S. Robinson
The RAND Journal of Economics
Vol. 16, No. 1 (Spring, 1985), pp. 141-145
Stable URL: http://www.jstor.org/stable/2555595
Page Count: 5
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Auctions are used in many different markets, including the leasing of a substantial fraction of the natural resources in the United States. The procedures used in the auctions conducted by the federal government have been a continuing source of controversy. One of the concerns has been the possibility of collusion among bidders. This article shows that cartels are stable if the seller uses open ascending-bid (oral) auctions, but not if he uses sealed high-bid auctions. This may help to explain the frequent use of sealed high-bid auctions.
The RAND Journal of Economics © 1985 RAND Corporation