Pre-play communication in procurement auctions: silence is not golden - HAL-SHS - Sciences de l'Homme et de la Société Accéder directement au contenu
Pré-Publication, Document De Travail Année : 2015

Pre-play communication in procurement auctions: silence is not golden

Résumé

I study the effect of cheap talk between bidders on the outcome of a first-price procurement auction in which participation is costly. Although no side-payments or commitments are allowed, their exists a family of equilibria in which sellers use communication to collude on a subset of participants and/or to reveal information about their cost. I show that the buyer may benefit from cheap talk between sellers, and that the surplus increases with the amount of information revealed in equilibrium under fairly general conditions. This is because when communication is cheap, sellers cannot directly collude on higher prices. Rather, communication leads to a competition between fewer, but more aggressive bidders, which entails more allocative efficiency and a decrease in the total wasteful entry cost.
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Dates et versions

hal-00856078 , version 1 (30-08-2013)
hal-00856078 , version 2 (06-03-2015)

Identifiants

  • HAL Id : hal-00856078 , version 2

Citer

Lucie Ménager. Pre-play communication in procurement auctions: silence is not golden. 2015. ⟨hal-00856078v2⟩
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