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Modeling and Empirical Assessment of the Parallelism at the Auction

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  • Andrey Shastitko
  • Anastasia Shastitko

Abstract

The article concerns standards of economic analysis in antitrust cases based on the example of the case on concerted actions (article 11 of The Federal Law No. 135-FZ On the Protection of Competition, which became enforced on 26 July, 2006). Using economic theory and quantitative analysis of the results of the auction, the article offers a methodological approach to the analysis of parallel behavior of participants of an auction. The development of new methodological approaches is necessary for the antitrust law enforcement when behavior of companies cannot be qualified as illegal per se. The analysis of the parallel behavior of participants of the auction consists of three main parts: the revelation of external factors that could have caused the parallel behavior of companies; the description of the companies motivation caused by these factors that could have led to the observed behavior; quantitative analysis of the probability of such motivation. According to the results, parallelism that was observed might have been not the consequence of collusion but have been caused by external economic factors. Based on the data of the results of the tender for the right to install advertising constructions in one of the Russian cities, using mathematical analysis, probability theory, game theory and mathematical statistics, it was shown how the existing market conditions could have led to the observed behavior of companies; and the probability of such behavior without collusion was estimated. The idea of the structure of economic analysis offered in this work can be employed in the wide range of antitrust cases on cartels and concerted actions.

Suggested Citation

  • Andrey Shastitko & Anastasia Shastitko, 2017. "Modeling and Empirical Assessment of the Parallelism at the Auction," Public administration issues, Higher School of Economics, issue 4, pages 7-28.
    • Handle: RePEc:nos:vgmu00:2017:i:4:p:7-28
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    References listed on IDEAS

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    1. Peter Cramton & John McMillan & Paul Milgrom & Bradley Miller & Bridger Mitchell & Daniel Vincent & Robert Wilson, 1998. "Simultaneous Ascending Auctions with Package Bidding," Papers of Peter Cramton 98cra2, University of Maryland, Department of Economics - Peter Cramton.
    2. Cramton Peter & Schwartz Jesse A, 2002. "Collusive Bidding in the FCC Spectrum Auctions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-20, December.
    3. Cramton, Peter & Schwartz, Jesse A, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Journal of Regulatory Economics, Springer, vol. 17(3), pages 229-252, May.
    4. Cramton, Peter, 1998. "Ascending auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 745-756, May.
    5. Sandro Brusco & Giuseppe Lopomo, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(2), pages 407-436.
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