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Collusion by Exclusion in Public Procurement

Author

Listed:
  • Regina Seibel
  • Samuel Škoda

Abstract

This paper studies bid rigging in auctions with bidder preselection. We develop a theoretical model to analyze the optimal behavior of partial bid-rigging cartels and show how commonly used two-stage auction formats, in which the first stage is used to preselect bidders, may be exploited. Based on our theoretical results, we construct a collusion marker reflecting the optimal cartel strategy and, using administrative data on public procurement auctions in Slovakia, we identify bidders suspected of collusion. We show that bidder preselection allows cartels to exclude competitive rivals and thereby increase procurement costs above what would be possible without preselection.

Suggested Citation

  • Regina Seibel & Samuel Škoda, 2026. "Collusion by Exclusion in Public Procurement," American Economic Journal: Microeconomics, American Economic Association, vol. 18(3), pages 148-202, August.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:3:p:148-202
    DOI: 10.1257/mic.20240308
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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