Detecting Bidders Groups in Collusive Auctions

American Economic Journal: Microeconomics, Vol. 8, No. 2, 2016

Posted: 5 Nov 2019

See all articles by Francesco Decarolis

Francesco Decarolis

Bocconi University - Department of Economics

Timothy G. Conley

University of Chicago - Booth School of Business

Date Written: May 2016

Abstract

We study entry and bidding in procurement auctions where contracts are awarded to the bid closest to a trimmed average bid. These auctions, common in public procurement, create incentives to coordinate bids to manipulate the bid distribution. We present statistical tests to detect coordinated entry and bidding choices. The tests perform well in a validation dataset where a court case makes coordination observable. We use the tests to detect coordination in a larger dataset where it is suspected, but not known. The results are used to interpret a major market shakeout following a switch to first price auctions.

Keywords: Bidding, procurement, coordination

JEL Classification: D44, D47, H57, R42

Suggested Citation

Decarolis, Francesco and Conley, Timothy G., Detecting Bidders Groups in Collusive Auctions (May 2016). American Economic Journal: Microeconomics, Vol. 8, No. 2, 2016, Available at SSRN: https://ssrn.com/abstract=3475512

Francesco Decarolis (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Timothy G. Conley

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7281 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
238
PlumX Metrics