Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/93997 
Year of Publication: 
2005
Series/Report no.: 
SFB/TR 15 Discussion Paper No. 39
Publisher: 
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY), München
Abstract: 
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.
Subjects: 
auctions
procurement
corruption
right of first refusal
numerical
JEL: 
D44
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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