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Auctions and corruption: An analysis of bid rigging by a corrupt auctioneer

Lengwiler, Yvan and Wolfstetter, Elmar. (2010) Auctions and corruption: An analysis of bid rigging by a corrupt auctioneer. Journal of Economic Dynamics and Control, Vol. 34, No. 10. pp. 1872-1892.

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Official URL: http://edoc.unibas.ch/dok/A5265549

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Abstract

In many auctions, the auctioneer is an agent of the seller. This invites corruption. We analyze a model in which the auctioneer orchestrates bid rigging by inviting a bidder to either lower or raise his bid, whichever is more profitable. The interplay between these two types of corruption gives rise to a complex bidding problem that we tackle with numerical methods. Our results indicate that corruption does not only redistribute surplus away from the seller, but also distorts efficiency. We furthermore explain why both, the auctioneer and bidders, have a vested interest in maintaining corruption.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Finanzmärkte (Lengwiler)
UniBasel Contributors:Lengwiler, Yvan
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:Elsevier
ISSN:0165-1889
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:22 Mar 2012 14:30
Deposited On:22 Mar 2012 14:16

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