Appendix On Russian Oil And Gas Auctions To Accompany "The Vulnerability Of Auctions To Bidder Collusion"
Source: Duke University (Fuqua-Global)
For the past few years the Russian government has held oral ascending-bid auctions for oil and gas leases. The auction rules require that there be at least two bidders at the auction for it to proceed. The Russian government sets a reserve price for each lease and determines the bid increments. The lowest feasible bid is one bid increment above the reserve price. In the auctions with more than two bidders, there often appears to be vigorous competition. In the large plurality of auctions that have only two bidders, many end after submission of only one bid, which is the smallest increment needed to award the lease. Also, many, but not all, of the bidders participating in the two-bidder auctions never win any oil or gas leases.