Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach

Kei Kawai, Jun Nakabayashi, Juan Ortner and Sylvain Chassang

No 29625, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Cartels participating in procurement auctions frequently use bid rotation or prioritize incumbents to allocate contracts. However, establishing a link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such patterns. We show that by focusing on auctions in which the winning and losing bids are very close, it is possible to distinguish allocation patterns reflecting cost differences across firms from patterns reflecting non-competitive environments. We apply our tests to two datasets: the sample of Ohio milk auctions studied in Porter and Zona (1999), and a sample of municipal procurement auctions from Japan.

JEL-codes: L41 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-des and nep-reg
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Citations: View citations in EconPapers (6)

Published as Kei Kawai & Jun Nakabayashi & Juan Ortner & Sylvain Chassang, 2023. "Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach," The Review of Economic Studies, vol 90(1), pages 376-403.

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Journal Article: Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach (2023)
Working Paper: Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach (2021)
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