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On cartel detection and Moran’s I

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  • Johan Lundberg

    (Umeå University)

Abstract

This paper explores the potential of using the Moran’s I statistic to detect complementary bidding on public contracts. The test is applied to data concerning the so-called Swedish asphalt cartel, which was discovered in 2001. Using information on submitted bids and procurement characteristics for both the cartel period (1995–2001) and the post-cartel period (2003–2009), the Moran’s I correctly predicts complementary bidding behavior for linear and quadratic specifications when such behavior is likely to exist, and rejects such behavior when it’s unlikely to be present. Remarkably, the Moran’s I also correctly indicates and rejects complementary bidding on the basis of information on the separate bids alone.

Suggested Citation

  • Johan Lundberg, 2017. "On cartel detection and Moran’s I," Letters in Spatial and Resource Sciences, Springer, vol. 10(1), pages 129-139, March.
    • Handle: RePEc:spr:lsprsc:v:10:y:2017:i:1:d:10.1007_s12076-016-0176-4
    DOI: 10.1007/s12076-016-0176-4
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    References listed on IDEAS

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    1. Bergman, Mats A. & Lundberg, Johan & Lundberg, Sofia & Stake, Johan Y., 2015. "Using spatial econometrics to test for collusive behavior in procurement auction data," Umeå Economic Studies 917, Umeå University, Department of Economics.
    2. Pim Heijnen & Marco A. Haan & Adriaan R. Soetevent, 2015. "Screening for collusion: a spatial statistics approach," Journal of Economic Geography, Oxford University Press, vol. 15(2), pages 417-448.
    3. Abrantes-Metz, Rosa M. & Froeb, Luke M. & Geweke, John & Taylor, Christopher T., 2006. "A variance screen for collusion," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 467-486, May.
    4. H. Kelejian, Harry & Prucha, Ingmar R., 2001. "On the asymptotic distribution of the Moran I test statistic with applications," Journal of Econometrics, Elsevier, vol. 104(2), pages 219-257, September.
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    More about this item

    Keywords

    Antitrust; Auction; Cartel and collusion; Complementary bidding; Public procurement; Spatial econometrics;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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