Collusion in Bidding Markets: The Case of the French Public Transport Industry

Philippe Gagnepain and David Martimort

No 25-1631, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We explore empirically the impact of the market sharing collusive practices that were implemented in the French public transportation industry between 1994 and 1999. We build a structural model of bidding markets where innovating firms compete for the market and have the ability to spread the benefits of their innovation through all markets on which they are active. Each local competitive environment shapes the distribution of the prices (the bids) paid by public authorities to transport operators. We recover empirically the distribution of prices and innovation shocks and we show that collusive practices had overall a limited impact on prices. Firms were in reality more interested in avoiding significant financial risks inherent to the activity, as well as the high cost of preparing a tender proposal. As a by-product, we perform a counterfactual analysis that allows us to simulate how an increase in firms’ innovation reduces prices significantly.

Keywords: Bidding Markets; Market Sharing; Collusion; Innovation; Public Transport (search for similar items in EconPapers)
JEL-codes: D22 D44 K21 L9 (search for similar items in EconPapers)
Date: 2025-03-31
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:130478

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