It's not only legal, it's standard business practice. One of the recent examples of this was when Google bid against itself during an auction for spectrum that

It's not only legal, it's standard business practice. One of the recent examples of this was when Google bid against itself during an auction for spectrum that it didn't want, solely to drive up the price. As long as you are not colluding with the selling party to drive up the price (in which case, this is illegal, known as shill bidding) - all is fair in an auction.