Collusion In Homogenous Multi-unit Auction With An Experimental Analysis

An auction is a market institution with an explicit set of rules determining resource allocation and prices on the basis of bids from the market participants. Auction has the characteristics of fair, open and justice. In the modern society, auctions had been greatly used in various flied, creating an important influence in economic affairs, especially in the environmental resources transfer of ownership and public goods in government procurement. The radio spectrum auction design and implementation of the Federal Communications Commission (FCC), take auction theory research into the practice time.Collusion is a widespread problem in auctions, also an important aspect of effectiveness of the competition. It will reduce the income of auction, lead to the improper resources configuration, also severely damage the fair principle, therefore, collusion will be greatly reduce auction efficiency. To prevent collusion in auctions, mechanism design is necessary to study. It can improve the efficiency of auction, making resources to get optimal allocation.This article examines the strategy of a cartel of bidders in an auction and the obstacles to stable cartel formation in different bidding environments. In order to keep the cartel stability and try to maximize joint expected profits, the recommended cartel strategies should be incentive-compatible. Especially, we compared the stability of cartels for the independent values and the common value models under different types of auctions. Then discuss collusion in various kinds of auctions and pointed out that the auction mechanism designer can take some effective measures to prevent the occurrence of conspiracy with the standard factors of conspiracy and some of related factors in auction rules.We analyzes collusion in auctions of multiple units under the VCG price with the cooperative game theory and put forward of "strong" cartel theory model and "weak "cartel theory model. According to the characteristics of environmental resources market, we did experiments to analysis collusion in auctions for carbon emission permits which is homogeneous multi-units has characteristics of private value and common value, testing four auction forms--unified and discriminatory price sealed bid auctions, an ascending clock auction and Vickrey auction. We compared the market efficiency and the seller earnings in auctions under the four forms of auctions. The main purpose of this experiment is to analysis the influence of conspiracy in the auctions, our main result is that explicit collusion can greatly reduce auction efficiency. The auctioneer should design certain mechanism to prevent the occurrence of conspiring in auction.