Scoring and Cartel Discipline in Procurement Auctions

Juan Ortner, Sylvain Chassang, Kei Kawai and Jun Nakabayashi
Additional contact information
Juan Ortner: Boston University
Sylvain Chassang: Princeton University
Kei Kawai: University of California Berkeley and& University of Tokyo
Jun Nakabayashi: Kyoto University

Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: Auctioneers suspecting bidder collusion often lack the formal evidence needed for legal recourse. A practical alternative is to design auctions that hinder collusion. Since Abreu et al. (1986), economic theory has emphasized imperfect monitoring as a constraint on collusion, but evidence remains scarce on whether: (i) information frictions meaningfully limit real-world collusion; and (ii) auctioneers can effectively exploit these frictions. Indeed, transparency concerns prevent the introduction of explicit randomness in auction design. We make progress on this issue by studying the impact of subjective scoring in auctions run by Japan’s Ministry of Land, Infrastructure, and Transportation. The adoption of scoring auctions significantly reduced winning bids in ways inconsistent with competition. Model-based inference suggests that the cartel’s dynamic obedience constraints were binding and tightened by imperfect monitoring. Subjective scoring can successfully leverage imperfect monitoring frictions to reduce the scope of collusion.

Keywords: procurement; scoring; cartel discipline; imperfect monitoring (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-com, nep-des and nep-gth
References: Add references at CitEc
Citations:

Downloads: (external link)
https://gceps.princeton.edu/wp-content/uploads/202 ... _scoring_cartels.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:342

Access Statistics for this paper

More papers in Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies. Contact information at EDIRC.
Bibliographic data for series maintained by Bobray Bordelon ().