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

Kei Kawai, Jun Nakabayashi, Juan Ortner and Sylvain Chassang
Additional contact information
Kei Kawai: UC Berkeley
Sylvain Chassang: Princeton University

Working Papers from Princeton University. Economics Department.

Abstract: Cartels participating in procurement auctions frequently use bid rotation or incumbency priority to allocate market shares. However, establishing a tight link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such behavior. We show that by focusing on the set of 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 noncompetitive behavior. We apply our tests to two datasets: the sample of Ohio school milk auctions studied in Porter and Zona (1999), and a sample of municipal procurement auctions held in Japan.

Keywords: procurement; collusion; backlog; incumbency; regression discontinuity; antitrust (search for similar items in EconPapers)
JEL-codes: D40 D43 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-com and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
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 (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2021-76

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