First-best collusion without communication

•I study a repeated 2-bidder IPV first-price auction in which the type distribution is trinary.•There is no communication between the bidders, no monetary transfers, and no public randomization.•I show that the first-best outcome can be approximated in a repeated-game equilibrium.

I study a 2-bidder infinitely repeated IPV first-price auction without transfers, communication, or public randomization, where each bidderʼs valuation can assume, in each of the (statistically independent) stage games, one of three possible values. Under certain distributional assumptions, the following holds: for every ϵ>0 there is a nondegenerate interval Δ(ϵ)⊂(0,1), such that if the biddersʼ discount factor belongs to Δ(ϵ), then there exists a Perfect Public Equilibrium with payoffs ϵ-close to the first-best payoffs.