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The Value of Privacy in Cartels: An Analysis of the Inner Workings of a Bidding Ring / Kei Kawai, Jun Nakabayashi, Juan M. Ortner.
- Format:
- Book
- Author/Creator:
- Kawai, Kei.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w28539.
- NBER working paper series no. w28539
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2021.
- Summary:
- We study the inner workings of a bidding cartel focusing on the way in which bidders communicate with one another regarding how each bidder should bid. We show that the designated winner of the cartel can attain higher payoffs by randomizing its bid and keeping it secret from other bidders when defection is a concern. Intuitively, randomization makes defection less attractive as potential defectors face the risk of not winning the auction even if they deviate. We illustrate how our theoretical predictions are borne out in practice by studying a bidding cartel that operated in the town of Kumatori, Japan.
- Notes:
- Print version record
- March 2021.
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