Bid rigging : an analysis of corruption in auctions

Arbeitspapier

In many auctions, the auctioneer is an agent of the seller. This invites corruption. We propose a model of corruption in which the auctioneer orchestrates bid rigging by inviting a bidder to either lower or raise his bid, whichever is more profitable. We characterize equilibrium bidding in first- and second-price auctions, show how corruption distorts the allocation, and why both the auctioneer and bidders may have a vested interest in maintaining corruption. Bid rigging is initiated by the auctioneer after bids have been submitted in order to minimize illegal contact and to realize the maximum gain from corruption.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1488

Classification and Topics

• Classification: Wirtschaft ; Auctions
• Subject: auctions ; procurement ; corruption ; right of first refusal ; numerical methods ; Auktionstheorie ; Korruption ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lengwiler, Yvan ; Wolfstetter, Elmar
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/18952
• Last update: 10.03.2025, 11:45 AM CET