Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities

Abstract

Collusive equilibria exist in simultaneous ascending bid auctions with multiple objects, even with large complementarities in the buyers' utility functions. The bidders collude by dividing the objects among themselves, while keeping the prices low. In the most collusive equilibrium the complementarities are never realized. The scope for collusion however narrows as the ratio between the number of bidders and the number of objects increases.

Measuring the Efficiency of an FCC Spectrum Auction

“…We now list a series of assumptions. These assumptions will be referenced in a series of remarks about the robustness of the theoretical results in the papers Brusco and Lopomo (2002) and EngelbrechtWiggans and Kahn (2005), below. We first assume w a is private information.…”

“…However, we believe the evidence in favor of implicit collusion is strong enough that any structural estimator for spectrum auction data should be consistent under the only models of implicit collusion in simultaneous ascending auctions in the literature. Brusco and Lopomo (2002), or BL, and Engelbrecht-Wiggans and Kahn (2005), or EK, present models of simultaneous ascending auctions that in many cases allow for implicit collusion between bidders. A common theme will be that BL's and EK's examples of auctions with private values that are independent across items for sale will often satisfy pairwise stability in matches only.…”

“…This condition may be untenable because a may instead have not added the license j to a's package because of a fear of suffering retaliation from bidder η (j). Therefore, maximizing Q addmatch (β) produces an inconsistent estimator under the intimidatory equilibria in Brusco and Lopomo (2002) and Engelbrecht-Wiggans and Kahn (2005). Columns 3 and 4 report a priori unreasonable estimates.…”

Economics at the Federal Communications Commission

“…For example, Marshall and Marx (2006) show that information on the identity of the winner of an auction facilitates collusion at a single-object auction. Brusco and Lopomo (2002) show that this effect is even more important in simultaneous ascending bid auctions such as those run by the FCC. The importance of the issue of collusion in auction design is highlighted in a survey article by Klemperer (2002), who states (p. 170), "A first major set of concerns for practical auction design involves the risk that participants may explicitly or tacitly collude to avoid bidding up prices."…”

Measuring the Efficiency of an FCC Spectrum Auction

“…This condition may be untenable because a may instead have not added the license j to a's package because of a fear of suffering retaliation from bidder η (j). Therefore, maximizing Q addmatch (β) produces an inconsistent estimator under the intimidatory equilibria in Brusco and Lopomo (2002) and Engelbrecht-Wiggans and Kahn (2005).…”