Collusion by Exclusion in Public Procurement

Regina Seibel and Samuel Škoda

American Economic Journal: Microeconomics, 2026, vol. 18, issue 3, 148-202

Abstract: This paper studies bid rigging in auctions with bidder preselection. We develop a theoretical model to analyze the optimal behavior of partial bid-rigging cartels and show how commonly used two-stage auction formats, in which the first stage is used to preselect bidders, may be exploited. Based on our theoretical results, we construct a collusion marker reflecting the optimal cartel strategy and, using administrative data on public procurement auctions in Slovakia, we identify bidders suspected of collusion. We show that bidder preselection allows cartels to exclude competitive rivals and thereby increase procurement costs above what would be possible without preselection.

JEL-codes: D43 D44 H57 L12 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/mic.20240308

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