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Detecting Bidders Groups in Collusive Auctions

Timothy Conley () and Francesco Decarolis ()

American Economic Journal: Microeconomics, 2016, vol. 8, issue 2, 1-38

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. (JEL D44, D47, H57, R42)

JEL-codes: D44 D47 H57 R42 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20130254
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