Working Paper No. 636

Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions

Publicerad: March 1, 2005Antal sidor: 36Nyckelord: Auction; Capacity; Collusion; Electricity Market; Supply FunctionJEL-koder: D43; D44; L13; L41; L94

Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions Emmanuel Dechenaux and Dan Kovenock


This paper contributes to the study of tacit collusion by analyzing infinitely repeated multiunit uniform price auctions in a symmetric oligopoly with capacity constrained firms. Under both the Market Clearing and Maximum Accepted Price rules of determining the uniform price, we show that when each firm sets a price-quantity pair specifying the firm's minimum acceptable price and the maximum quantity the firm is willing to sell at this price, there exists a range of discount factors for which the monopoly outcome with equal sharing is sustainable in the uniform price auction, but not in the corresponding discriminatory auction. Moreover, capacity withholding may be necessary to sustain this outcome. We extend these results to the case where firms may set bids that are arbitrary step functions of price-quantity pairs with any finite number of price steps. Surprisingly, under the Maximum Accepted Price rule, firms need employ no more than two price steps to minimize the value of the discount factor above which the perfectly collusive outcome with equal sharing is sustainable on a stationary path. Under the Market Clearing Price rule, only one step is required. That is, within the class of step bidding functions with a finite number of steps, maximal collusion is attained with simple price-quantity strategies exhibiting capacity withholding.

 

Glädjeparadoxen

Historien om skolans uppgång, fall och möjliga upprättelse

Glädjeparadoxen.gif

Den här boken, författad av Gabriel Heller Sahlgren och Nima Sanadaji, spårar rötterna till den svenska skolans problem via en djupdykning i forskning och modern historia. På 1800-talet slog den progressiva utbildningsfilosofin igenom, med fokus på glädje, elevdemokrati och elevledd undervisning. Problemet var bara att den nya pedagogiken inte fungerade som det var tänkt. Forskningen tyder inte på att elever lär sig mer när de har roligt.

Läs mer

Institutet för Näringslivsforskning, Grevgatan 34 - 2 tr, Box 55665, SE-102 15 Stockholm, Sweden | Tel: +46-(0)8-665 45 00 | info@ifn.se