DEFINITION of 'Hockey Stick Bidding'

An anti-competitive bidding practice in which a market participant (or trader) offers an extremely high price for a small portion of a good.

The name derives from the price curve of this practice, which resembles a hockey stick.

BREAKING DOWN 'Hockey Stick Bidding'

This is considered to be a fraudulent practice of pushing up prices. Market participants submit offers at extremely high prices because they know that the demand for their good is sure to be high.

A good example of this occurred during the California energy crisis of 2001. Energy traders knew that California would need all available power and would be willing to pay any price to get it.

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RELATED FAQS
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