Weak and strong multimarket bidding rings (Q361828)

This article deals with bidding rings in multiple auctions. A bidding ring is a collection of bidders who collude to control the bids in order to decrease the auction price for the suitable item. When no transfers are possible among members, the bidding ring is said to be weak, and it is strong when members can make side payments. The literature contains many theoretical works on bidding rings in single auctions. On the other hand, some empirical studies have shown the existence of bidding rings that cover several auction markets. The focus of the article is on bidding rings in the case of multiple auctions for both cases weak and strong. The authors analyse a collusive network of bidding rings acting at the same time in multiple markets. They consider a model consisting of \(N\) ex-ante symmetric risk-neutral bidders and assume that either all rings are weak or all rings are strong. They examine ``the ex-ante incentives of bidders, and demonstrate that these incentives led to the emergence of dominant groups, or stars and interlinked stars in equilibrium.'' Furthermore, they analyse ``the observable consequences for bidding behaviour of these architectures that not only allowed the detection of collusion but also permitted weak cartels to be distinguished from strong cartels.''