1. Research Aims
Collusion in auctions is a non-competitive agreement between bidders to collaborate and maximise their total profit by reducing or eliminating competition. It is a primary concern for auctioneers as people who form cartels can significantly harm the seller’s revenue. The aim of the paper “Fighting collusion in auctions: An experimental investigation” is to compare collusive properties of three types of auctions and how effective they are in deterring collusion which are:
• English auction (EN) – where bidders outbid each other until no-one else is willing to bid against the current bid. The participant who placed the current bid wins the auctions and pays the bid amount.
• First-price sealed-bid auction (FP) – Where bidders simultaneously place bids without the knowledge of each other’s bids. The highest bidder wins the auction and pays the bid amount.
• Amsterdam auction (AMSA) – Where bidders bid in two phases. In phase 1, the auctioneer raises the price until only 2 bidders remain. In phase 2, the remaining bidders submit sealed bids and the highest bid pays the price equal to the second highest bid. Both bidders also receive a premium which is a fraction of the difference between the second highest bid and bottom price (Hu, Offerman & Onderstal, 2009).
2. Model
To test these models in collusion, bidders interact in a three-stage game and can be of type risk neutral, strong or weak. In the first stage, the strong bidders vote for or against forming a cartel and a cartel is only formed if they all agree. When they form a cartel they incur a cost. In the second stage, if a cartel is formed the strong bidders interact in a pre-auction knock-out mechanism where all bidders submit a sealed bid and the highest bidd...
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..., 2013). As these contractors are risk-averse, they will drop out in the first phase leaving only the most efficient contractors to compete against each other. Furthermore the inclusion of a premium, offers less incentive for collusion as contractors are more inclined to deviate from a cartel to receive a higher payoff. Although theoretically feasible in a controlled environment, in real life there are laws and regulations that protect firms against collusive practices. In the case where the client may suspect collusion is a real possibility, AMSA offers the most effective collusion deterrence. However administratively it may be difficult to implement phase 1, where the price sequentially drops as the tender process takes several months with contractors rarely interacting with each other compared to an auction where the bidders are together and bid in one sitting.
There are no statutory guarantees available at traditional auction using auctioneer if the goods purchased do not fit for the purpose, do not correspond with the description and do not have an acceptable quality. (ACL s 2)
Bribery has always been a controversial issue, especially in the business world. Many argue that bribes are a necessary cost of doing business while others view them with distain, claiming that they are antiquated and create an unfair advantage. In the late 90’s, the problem reached a boiling point. Although laws such as the Foreign Corrupt Practices Act made bribery illegal in the United States, it still remained an international issue. Numerous skeptics claimed that violators of the act slipped through loopholes and that the law was not properly enforced. This law only applied to the United States, but bribery had become a worldwide concern. In 1998, the International Anti-Bribery and Fair Competition Act was enacted. The Act became law on November 10, 1998, however; it did not take effect until May 1, 1999.
The Truth in Negotiations Act was passed on December 1, 1962 requiring government contractors to submit cost or pricing data if the procurement met specific requirements in order to establish that the offer is fair and reasonable. The history of The Truth in Negotiations Act will set the stage for its significance in the twenty-first century. Prior to World War II, the United States government conducted its bidding process for procurement in an open bid environment. What was required for a bid was a complete description of the requirement, two or more suppliers capable and willing to complete the requirement, a selection based on price competition and sufficient time to prepare a complete statement of the government’s needs and terms. (Graetz, 1968). If any of these were missing then a negotiated contract would have to take place. This was a time consuming process.
If one tries to design and implement a bundled payment system with commercial payers, he or she would immediately find that there exist complex legal issues of Fraud and Abuse to consider. This is mainly because the applicable laws were not designed to such types of systems. Although it may require a significant amount of time and effort to set up a compliant bundled payment system, I believe that it is possible to create such systems, and eventually, to overcome legal challenges for Fraud and Abuse. This paper hypothesizes that in designing commercial bundled payment system, increased utilization of applicable exceptions of related laws can reduce the potential legal risk of Fraud and Abuse.
What is a perfectly competitive market? A perfectly competitive market is defined as something that occurs in an industry when that industry is made up of many small firms producing homogeneous products, when there are no impediment to the entry or exit of firms, and when full information is available (Baumol and Blinder, 200). In other words, when competition is at its greatest possible level, it describes a market structure in a perfect competition. A perfect competitive market consists of many buyers and sellers and therefore each buyer or seller is a price taker. All sellers tend to supply the same identical product. When four conditions are satisfied, a market is said to operate under perfect competition. We need to be able to define and explain the four conditions which are numerous small firms and customers, homogeneity of product, freedom of entry and exit, and perfect information.
This is when two or more persons who want the same item and keeps bidding the price up until it reaches a fair market value. By law you most have a least two persons present to conduct an auction. Then the highest bidder buys it for the final bided price.In advertisement for auction houses that catches must people eyes is to get fast cash selling personal property. The advertisement means just that you can get money within fourteen days or less after the auction house sells your personal property. The auction business has been around for a long time with a good track record for selling anything that has a price or doesn't have a price.
best price for the car. Instead, the confident buyer of the car will take the price quoted by the salesman as the negotiations starting point. It would therefore be wrong to imply that bluffing is unethical since both the seller and the buyer are positioning them self to maximize their opportunities. The buyer negotiates the price in order to purchase the car at the lowest price possible, while the seller does his best to sell the car at the highest possible price. Therefore, there is no violation of ethical conduct. In the business game, everyone is looking for an opportunity to get the best out of the
Predatory pricing “is alleged to occur when a firm sets a price for its product that is below some measure of cost and forfeits revenues in the short run to put competitors out of business” (Sheffet p.163-164). The reason firms take the short term loss is because they hope to drive out competitors and raise prices to monopolistic levels. By doing this, they covered their short term loss to make even greater profits in the long term than they would have by not using predatory tactics (Sheffert). Predatory pricing became illegal under Section 2 of the Sherman Act. It has remained one of the more difficult allegations for prosecutors to prove, due to the complexity of determining the company’s actual intent and whether or not it the strategy is competitive pricing. According to Areeda and Turner, there are three ways to determine if a firm is implementing predatory pricing. First, a price above marginal cost is presumed lawful; second, a price below marginal cost is considered unlawful, except when there is strong demand; and third, average variable cost is considered a good proxy for marginal cost. This is a reason predatory pricing is still important today. The courts must decide whether or not companies are engaging in competitive prices for the good of the consumers or are using predatory tactics for the good of their own company. The purpose of this paper is to focus on the current legislation regarding predatory pricing, determining when there is predation in an industry and the cause and effect relationship it has on an industry.
Agreeing with other industry members what price to charge is known as collusion. Collusion is defined as “Action in concert without any formal agreement… [it] is common when anti-monopoly legislation makes explicit agreements illegal or unenforceable. Its existence is [sometimes] extremely difficult to prove” Black et al (2012). Within this analysis, I will explain what collusion is, the different types, why firms may enter into this agreement, then outline a past example and finally explain why this silent or spoken agreement may break down. Collusive agreements or cartels may however be created by governments to protect and positively influence markets, examples of this are the US sugar manufacturing cartel (operating between 1934-74) and OPEC which is still in operation today.
The offeror is bound to fulfil the terms of his offer once it is accepted. The offer may be made in writing, by words or by conduct. Unilateral – some offers are purely one sided, made without the offeror’s having any idea whether they will ever be taken up and accepted, and thereby transformed into a contract. For example, when an advertisement where a person is rewarding another one if he finds his pet (which was lost). In this case, the person who is making such an offer is not sure whether this offer will ever be accepted.
We are faced with an extremely competitive market with two players. The situation could be summarized in the hereunder points:
One of the last remaining strongholds of classical contract law is the notion that contracts require offer and acceptance therefore, in order for a contract to become binding, offer, acceptance, consideration and intention to create legal relations must exist. However contracts are formed in different ways for each different circumstance. (Shawn Bayern, Offer and Acceptance in Modern Contract Law: A Needles Concept, 103 Cal. L. Rev. 67, 102 (2015)
Bribery is wrong, and it would be almost instinctive to point at the benefits of impartially functioning public servants and incorrupt corporations to our democratic society as justification. However, in this imperfect world where bribery is rife in varying degrees, is it possible to express this notion convincingly? Certainly 'because the UK Bribery Act says so' is far less persuasive to a council planning office in Shanghai than in London, and indeed in compliance with section 7 of the Bribery Act 2010 which relates to commercial offences, it is essential that this question is engaged with on a corporate scale and without assertion through dogma. Accordingly, this essay will argue that elements wrong with bribery are inclusive of both moral and economic considerations. Moreover, in conjunction with international mandates, advent of aggressive legislation such as that of the UK Bribery Act 2010 is representative of global efforts to eliminate bribery. Hence, it follows that bribery can never be considered a normal part of business because it is economically unsustainable in the long term.
First, the designs are completed before tender and tender can provide good time and cost control. Also, the tenderer can receive complete information and design and they can bid on the same basis, so the competition is fair. Moreover, this is design-led and the client can change the design ability, so the level of functionality and quality will be increased in the overall design. And then, it is relatively easy to arrange and manage if the design will be changed because of the client’s needs and technology. Also, traditional paths are a tried and tested route, so it is well established and the market is very familiar with.
While cartel firms may reverse engineer to come up with what appears to be competitive bids, many cases have shown that cartel bids fail in one or the other of these conditions. The last condition that is less emphasized in the study is the horse race test. This is the testing of the competitive and collusive bid models based on their separation from the first and second conditions (Bajari and Ye, 2003). It compares the cluster of competitive and collusive bids to test for significant differences.