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Collusion in Repeated Procurement Auction: A Study of a Paving Market in Japan

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  • Rieko Ishii

Abstract

We examine auction data to determine if bid rigging presents in procurement auctions for paving works in Ibaraki City, Osaka, Japan. We first show that sporadic bidding wars are caused by the participation of potential "outsiders." Assuming that the ring is all-inclusive if the auction is not the bidding war, we estimate the scheme by which the ring allocates a win to its members. It is found that the ring tends to select a bidder whose winless period is long and whose winning amount in the past is small relative to other bidders.

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File URL: http://www.iser.osaka-u.ac.jp/library/dp/2008/DP0710.pdf
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Bibliographic Info

Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0710.

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Date of creation: Mar 2008
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Handle: RePEc:dpr:wpaper:0710

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  1. Patrick Bajari & Lixin Ye, 2003. "Deciding Between Competition and Collusion," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 971-989, November.
  2. Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 381-411, July.
  3. Robert H. Porter & J. Douglas Zona, 1992. "Detection of Bid Rigging in Procurement Auctions," NBER Working Papers 4013, National Bureau of Economic Research, Inc.
  4. Robert Porter, 2005. "Detecting Collusion," Review of Industrial Organization, Springer, vol. 26(2), pages 147-167, December.
  5. Hopenhayn, Hugo A. & Skrzypacz, Andrzej, 2001. "Tacit Collusion in Repeated Auctions," Research Papers 1698r2, Stanford University, Graduate School of Business.
  6. McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences.
  7. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, October.
  8. Robert H. Porter & J. Douglas Zona, 1997. "Ohio School Milk Markets: An Analysis of Bidding," NBER Working Papers 6037, National Bureau of Economic Research, Inc.
  9. John McMillan, 1991. "Dango: Japan'S Price-Fixing Conspiracies," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 201-218, November.
  10. Aoyagi, Masaki, 2003. "Bid rotation and collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 112(1), pages 79-105, September.
  11. Joseph E. Harrington, Jr, 2005. "Detecting Cartels," Economics Working Paper Archive 526, The Johns Hopkins University,Department of Economics.
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Cited by:
  1. Arai, Koki & Ishibashi, Ikuo & Ishii-Ishibashi, Rieko, 2011. "Research and analysis on bid rigging mechanisms," Japan and the World Economy, Elsevier, vol. 23(1), pages 1-5, January.
  2. Maris Goldmanis & Antonio Penta & Francesco Decarolis, 2012. "Common Agency and Coordinated Bids in Sponsored Search Auctions," 2012 Meeting Papers 106, Society for Economic Dynamics.

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