Shopgoodwill.com Good Will The system enters fake bids to keep you uping your current bid. THe system will display a current bid and when you bid it automaticely increases the bid amount, "not the displayed bid amount." Orange County, California

I actually thought you would be complaining about what other people call the excessive(or at least not consistent) shipping and handling with this site.  As in your case what you are seeing is not "shill" bidding but "proxy" bidding. 

This is where a person puts their MAXIMUM bid they are willing to pay for an item.  The system then only displays the amount which puts them to get to the highest bid or their maximum amount, but does not display their maximum amount.  Another similar concept is "reserve price".  This is where the seller has a minimum amount they are willing to sell the item for.  If the item does not reach that minimum bid, it will not sell.   Like the "proxy" bid from the buyer, the "reserve price" from the seller is hidden and in most cases only revealed when the item reaches that price.

The best way to describe the proxy and reserve price is by an example.

Proxy bidding
If they have a current bid of $8 and the minimum bid is $1 increments.  If someone puts in a maximum bid of $20, the system will display the current bid at $9.  Now, if someone comes along and bids $15, the system will take the "proxy" bid and make it the next highest possible bid $16.  Since the "proxy" bid was placed before the original time will be displayed.  Now, if someone bids $25, the original proxy bid since it was a maximum of $20 is passed and the person that bid $25 will now have a current bid of $21, until either someone bids more and it doesn't go over their maximum of $25.

Reserve Price
If a seller has an item that they do not want to sell for less than $100.  They may start the opening bid at $1 to generate bids.  If at the end of the auction even if the highest bid is only $99 the item will not be sold and the seller has the right to take it back and relist it for another auction.  Now, if the highest bid is $100.00 or higher then the reserve has been met and the item will go to the buyer.

Oh and other major sites (such as the one that begins with an E and has a body of water as part of it's name) do the exact same thing.

There is one other part you failed to realize causes your theory to fail.  The system does not force anyone to bid a certain amount.  So if a buyer decides that the item is too expensive they can elect to just not bid.    But with this said, in most jurisdictions "shill" bidding is illegal and if you have hard proof(more than just a suspicion) then take what you have to your local news organization and blow the whistle on them.