@article{CHE2018398,
title = {Weak cartels and collusion-proof auctions},
journal = {Journal of Economic Theory},
volume = {178},
pages = {398-435},
year = {2018},
issn = {0022-0531},
doi = {https://doi.org/10.1016/j.jet.2018.09.005},
url = {https://www.sciencedirect.com/science/article/pii/S0022053118305842},
author = {Yeon-Koo Che and Daniele Condorelli and Jinwoo Kim},
keywords = {Weak cartels, Weakly collusion-proof auctions, Optimal auctions},
abstract = {We study private value auctions in which bidders may collude without using side-payments. In our model, bidders coordinate their actions to achieve an outcome that interim-Pareto dominates the noncooperative outcome. We characterize auctions that are collusion-proof in the sense that no such coordination opportunities exist, and show that the efficient and revenue maximizing auctions are not collusion-proof unless all bidders exhibit a concave distribution of valuations. We then solve for revenue maximizing collusion-proof auctions. If distributions of valuations are symmetric and single-peaked, the optimal selling mechanism is a standard auction with a minimum bid, followed by sequential negotiation in case no bidder bids above the minimum bid.}
}