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Detecting Collusion on Highway Procurement

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  • Florencia M. Gabrielli

    (Universidad Nacional de Cuyo - CONICET)

Abstract

This paper proposes a procedure to detect collusion in asymmetric first-price procurement. The main objective is twofold. First, to provide a methodology to detect collusion using a structural approach, and second to apply the methodology to field data on procurement auctions for highway construction in California. I identify two different sets of firms as potential ring members. Relying on an exogenous number of bidders and the assumption that within each type bidders are symmetric, I find evidence supporting the collusive scheme, for the two mentioned sets of firms by comparing a model of competition and a model of collusion.

Suggested Citation

  • Florencia M. Gabrielli, 2013. "Detecting Collusion on Highway Procurement," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 59, pages 127-165, January-D.
    • Handle: RePEc:lap:journl:587
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    References listed on IDEAS

    as
    1. Patrick Bajari, 2001. "Comparing competition and collusion: a numerical approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(1), pages 187-205.
    2. Isabelle Perrigne & Quang Vuong, 1999. "Structural Econometrics of First-price Auctions: A Survey of Methods," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(3), pages 203-223, November.
    3. Steve Kelman, 1990. "Procurement and Public Management," Books, American Enterprise Institute, number 53122, September.
    4. Aryal, Gaurab & Gabrielli, Maria F., 2013. "Testing for collusion in asymmetric first-price auctions," International Journal of Industrial Organization, Elsevier, vol. 31(1), pages 26-35.
    5. Marmer, Vadim & Shneyerov, Artyom & Xu, Pai, 2013. "What model for entry in first-price auctions? A nonparametric approach," Journal of Econometrics, Elsevier, vol. 176(1), pages 46-58.
    6. Elena Krasnokutskaya & Katja Seim, 2011. "Bid Preference Programs and Participation in Highway Procurement Auctions," American Economic Review, American Economic Association, vol. 101(6), pages 2653-2686, October.
    7. Véronique Flambard & Isabelle Perrigne, 2006. "Asymmetry in Procurement Auctions: Evidence from Snow Removal Contracts," Economic Journal, Royal Economic Society, vol. 116(514), pages 1014-1036, October.
    8. Marmer, Vadim & Shneyerov, Art & Xu, Pai, 2010. "Supplement to "What Model for Entry in First-Price Auctions? A Nonparametric Approach"," Microeconomics.ca working papers vadim_marmer-2010-22, Vancouver School of Economics, revised 18 Feb 2011.
    9. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer.
    10. Tong Li & Isabelle Perrigne, 2003. "Timber Sale Auctions with Random Reserve Prices," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 189-200, February.
    11. Gaurab Aryal & Maria F. Gabrielli, 2012. "Estimating Revenue Under Collusion-Proof Auctions," ANU Working Papers in Economics and Econometrics 2012-597, Australian National University, College of Business and Economics, School of Economics.
    12. Timothy G. Conley & Francesco Decarolis, 2016. "Detecting Bidders Groups in Collusive Auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 8(2), pages 1-38, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Auctions; Cartel; Structural Approach; Collusion; Competition.;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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