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Vertical collusion in public procurement: Estimation based on data for R&D composite auctions

Author

Listed:
  • Belev, S.

    (Institute of Applied Economic Research (RANEPA), Russia
    Lomonosov Moscow State University, Moscow, Russia)

  • Veterinarov, V.

    (University College London, United Kingdom
    Lomonosov Moscow State University, Moscow, Russia)

  • Matveev, E.

    (Institute of Applied Economic Research (RANEPA), Russia
    Lomonosov Moscow State University, Moscow, Russia)

Abstract

One of the key problems in public procurement research is identifying violation signs, including vertical collusion. This paper discusses composite auctions (with a selection of a winner based not only on the price criterion) in the procurement for the results of research and development (R&D) work in Russia. Using the metric of interaction frequency, we identified suppliers that were potentially affiliated with customers. The results of econometric modeling suggest that potentially affiliated suppliers win with the final price closer to the initial maximum contract price (IMCP) than independent suppliers. This result is robust to specifi cation changes and different evaluation methods. Potentially affiliated participants have higher quality scores in contests with potentially affiliated organizers. At the same time, independent participants receive lower scores in such auctions. Therefore, a potentially affi iated participant could set a higher price, winning due to an overstated quality criterion.

Suggested Citation

  • Belev, S. & Veterinarov, V. & Matveev, E., 2023. "Vertical collusion in public procurement: Estimation based on data for R&D composite auctions," Journal of the New Economic Association, New Economic Association, vol. 59(2), pages 36-63.
    • Handle: RePEc:nea:journl:y:2023:i:59:p:36-63
    DOI: 10.31737/22212264_2023_2_36-63
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    More about this item

    Keywords

    vertical collusion; public procurement; composite auctions; R&D; affiliation; quality criterion; tobit;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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