Che Yeon-Koo author Columbia University. Economics Kim Jinwoo author Columbia University. Economics contributor originator text Working papers New York Department of Economics, Columbia University 2007 We study an optimal collusion-proof auction in an environment where subsets of bidders may collude not just on their bids but also on their participation. Despite their ability to collude on participation, informational asymmetry facing the potential colluders can be exploited significantly to weaken their collusive power. The second-best auction - i.e., the optimal auction in a collusion-free environment - can be made collusion-proof, if at least one bidder is not collusive, or there are multiple bidding cartels, or the second-best outcome involves a nontrivial probability of the object not being sold. In case the second-best outcome is not weak collusion-proof implementable, we characterize an optimal collusion-proof auction. This auction involves nontrivial exclusion of collusive bidders - i.e., the object is not sold to any collusive bidder with positive probability. Economic theory 0708-05 http://hdl.handle.net/10022/AC:P:15442 English NNC NNC 2011-03-28 11:00:56 -0400 2011-06-22 15:35:35 -0400 3352 eng