Abstract: This paper assumes that the collusive bidders take advantage of the second-price pre-auction knockout collusive mechanism,and solves the collusion equilibrium under the first price main auction.We not only consider the auctioneers strategic response to collusion,but also consider the strategic responses between collusive bidders and non-collusive bidders.The main result shows that,compared to competitive biddings without collusions,the bidding of non-cartel members will become more aggressive to counteract disadvantage from cartel members.Furthermore,setting a reasonable reserve price by the auctioneer has significant effect on bidder collusion.

Key words: the second-price pre-auction knockout, bidder cllusion, reserve price