Going Once, Going Twice, Reported!
Tinbergen Institute Discussion Paper No. 09-085/1
32 Pages Posted: 10 Oct 2009 Last revised: 15 Apr 2013
Date Written: April 5, 2013
We experimentally examine the effectiveness of antitrust policies against bidding rings in the English auction (EN) and the first-price sealed-bid auction (FP). We consider both traditional antitrust policy (without a leniency program) and modern antitrust policy (with a leniency program). In EN, neither antitrust policy has a significant effect on cartel deterrence, cartel stability, cartel recidivism, and winning bids. In FP, traditional antitrust policy deters cartel formation, destabilizes cartels, reduces the probability that a cartel re-establishes, and reduces the average winning bid. In contrast, while a leniency program has no additional effect on cartel formation or cartel recidivism, it makes cartels more stable and reduces the winning cartel bid.
Keywords: Leniency Programs, Auctions, Cartels, Laboratory Experiments
JEL Classification: C92, D44, L41
Suggested Citation: Suggested Citation