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Debarment and Collusion in Procurement Auctions

Claudia Cerrone () and Yoan Hermstrüwer ()
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Yoan Hermstrüwer: Max Planck Institute for Research on Collective Goods

No 2018_05, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: This article presents the first experiment exploring the impact of debarments - the exclusion of colluding bidders - on collusion in procurement auctions. We find that debarments and their most common alternative, fines, reduce collusion and bids relative to a market with no sanction. The deterrent effect of debarments increases in their length. However, shorter debarments reduce efficiency and increase the bids of non-debarred bidders. This suggests that debarments that are too lenient may trigger tacit collusion among the bidders who remain in the market, thereby facilitating the very behavior they aim to deter.

Keywords: debarment; collusion; procurement auctions; procurement law; sanctions (search for similar items in EconPapers)
JEL-codes: C92 D03 D44 K21 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-des, nep-exp, nep-gth and nep-law
Date: 2018-04, Revised 2019-05
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