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Complementary bidding and the collusive arrangement: Evidence from an antitrust investigation

Robert Clark (), Decio Coviello and Adriano De Leverano ()
Additional contact information
Decio Coviello: HEC Montreal
Adriano De Leverano: ZEW - Leibniz Centre for European Economic Research in Mannheim

No 1446, Working Paper from Economics Department, Queen's University

Abstract: A number of recent papers have proposed that a pattern of isolated winning bids may be associated with collusion. In contrast, others have suggested that bid clustering, especially of the two lowest bids, is indicative of collusion. In this paper, we present evidence from an actual procurement cartel uncovered during an anticollusion investigation that reconciles these two points of view and shows that both patterns arise naturally together as part of a cartel arrangement featuring complementary bidding. Using a difference-in-difference approach, we compare the extent of winning-bid isolation and clustering of bids in Montreal's asphalt industry before and after the investigation to patterns over the same time span in Quebec City, whose asphalt industry has not been the subject of collusion allegations. Our findings provide causal evidence that the collusive arrangement featured both clustering and isolation. We use information from testimony of alleged participants in the cartels to explain how these two seemingly contradictory patterns can be harmonized.

Keywords: Auction; Bidding ring; Collusion; Complementary bidding; Clustered bids; Missing bids; Public procurement (search for similar items in EconPapers)
JEL-codes: D44 H57 L22 L74 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-07
New Economics Papers: this item is included in nep-com, nep-des and nep-law
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