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Detecting Collusion through Exchange of Favors in Repeated Procurement Auctions

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  • Rieko Ishii

    (Institute of Social and Economic Research, Osaka University)

Abstract

It is known that bid rigging in public-work auctions in Japan often takes the form of exchanging favors. In such a scheme, the winner is designated based on the amount of favor he has given to other members of the ring. By explicitly modeling gfavor h as an explanatory variable, this paper analyzes data from the public-works auctions for consulting works in Naha, Japan, to confirm that such a collusion scheme is in operation.

Suggested Citation

  • Rieko Ishii, 2007. "Detecting Collusion through Exchange of Favors in Repeated Procurement Auctions," Discussion Papers in Economics and Business 07-15, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0715
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0715.pdf
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    References listed on IDEAS

    as
    1. Mark Duggan & Steven D. Levitt, 2002. "Winning Isn't Everything: Corruption in Sumo Wrestling," American Economic Review, American Economic Association, vol. 92(5), pages 1594-1605, December.
    2. Martin Pesendorfer, 2000. "A Study of Collusion in First-Price Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 381-411.
    3. McAfee, R Preston & McMillan, John, 1992. "Bidding Rings," American Economic Review, American Economic Association, vol. 82(3), pages 579-599, June.
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    4. Skrzypacz, Andrzej & Hopenhayn, Hugo, 2004. "Tacit collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 114(1), pages 153-169, January.
    5. Aoyagi, Masaki, 2003. "Bid rotation and collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 112(1), pages 79-105, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bid rigging; repeated auction.;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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