Picking the price at which to sell a public asset is a daunting task. The political stakes are high: this week Britain launched a review of such sales after claims that Royal Mail, the postal service, had been sold too cheaply. But the right price is hard to find, because privatisations are often one-offs. How much should, say, Portugal ask for tap, the state-owned airline it has been urged to sell? Auctions are increasingly used to tease out the best price. Yet new research shows how collusion can corrupt auctions of public assets, so that the state is still short-changed.
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