nep-des New Economics Papers
on Economic Design
Issue of 2018‒04‒02
three papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Strategy-Proofness and Efficiency of Probabilistic Mechanisms for Excludable Public Good By Kazuhiko Hashimoto; Kohei Shiozawa
  2. An efficient and implementable auction for environmental rights By Peyman Khezr; Ian A. MacKenzie
  3. Bid rigging and entry deterrence in public procurement: Evidence from an investigation into collusion and corruption in Quebec By Robert Clark; decio Coviello; Jean-Francois Gauthier; Art Shneyerov

  1. By: Kazuhiko Hashimoto; Kohei Shiozawa
    Abstract: We study strategy-proof probabilistic mechanisms in a binary excludable public good model. We construct a new class of probabilistic mechanisms satisfying strategy-proofness, called mechanisms. We first show that the mechanisms are second-best efficient. Next, we identify the optimal mechanism with respect to the supremal welfare loss, and show that it improves the inefficiency of the equal cost sharing with maximal participation mechanism [Moulin (1994)] and the anonymous augmented serial mechanisms [Ohseto (2005)].
    Date: 2018–01
  2. By: Peyman Khezr (School of Economics, The University of Queensland); Ian A. MacKenzie (School of Economics, The University of Queensland)
    Abstract: This article proposes a simple and efficient auction design to allocate environmental rights, such as tradable pollution permits. We show that if the auctioneer limits the number of bids that each buyer submits—coupled with a simple ex-post supply adjustment rule—then truthful bidding is obtained. Consequently, the uniform-price auction becomes efficient and revenue superior to conventional uniform-price auctions that are currently observed in pollution markets.
    Keywords: auctions; multi-unit; uniform-price; efficiency, pollution.
    JEL: D44 D82 L10 Q50
    Date: 2018–02–27
  3. By: Robert Clark (Queen's University); decio Coviello (HEC Montreal); Jean-Francois Gauthier (Boston College); Art Shneyerov (Concordia University)
    Abstract: We study the impact of an investigation into collusion and corruption to learn about the organization of cartels in public procurement auctions. Our focus is on Montreal’s asphalt industry, where there have been allegations of bid rigging, market segmentation, complementary bidding and bribes to bureaucrats, and where, in 2009, a police investigation was launched. We collect procurement data and use a difference-in-difference approach to compare outcomes before and after the investigation in Montreal and in Quebec City, where there have been no allegations of collusion or corruption. We find that entry and participation increased, and that the price of procurement decreased. We then decompose the price decrease to quantify the importance of two aspects of cartel organization, coordination and entry deterrence, for collusive pricing. We find that the latter explains only a small part of the decrease.
    Keywords: Collusion, Corruption, Bid rigging, Entry deterrence
    JEL: L22 L74 D44 H57
    Date: 2018–02

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