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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.

Suggested Citation

  • Rieko Ishii, 2008. "Collusion in Repeated Procurement Auction: A Study of a Paving Market in Japan," ISER Discussion Paper 0710, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0710
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    References listed on IDEAS

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    Citations

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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. Ishii, Rieko, 2009. "Favor exchange in collusion: Empirical study of repeated procurement auctions in Japan," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 137-144, March.
    3. Imhof, David, 2017. "Simple Statistical Screens to Detect Bid Rigging," FSES Working Papers 484, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    4. Wallimann, Hannes & Imhof, David & Huber, Martin, 2020. "A Machine Learning Approach for Flagging Incomplete Bid-rigging Cartels," FSES Working Papers 513, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    5. Nozomu Muto & Yasuhiro Shirata & Takuro Yamashita, 2020. "Revenue-Capped Efficient Auctions," Journal of the European Economic Association, European Economic Association, vol. 18(3), pages 1284-1320.
    6. Sylvain Chassang & Juan Ortner, 2019. "Collusion in Auctions with Constrained Bids: Theory and Evidence from Public Procurement," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2269-2300.
    7. Granlund, David & Rudholm, Niklas, 2023. "Calculating the probability of collusion based on observed price patterns," Umeå Economic Studies 1014, Umeå University, Department of Economics, revised 13 Oct 2023.
    8. Maris Goldmanis & Antonio Penta & Francesco Decarolis, 2012. "Common Agency and Coordinated Bids in Sponsored Search Auctions," 2012 Meeting Papers 106, Society for Economic Dynamics.
    9. Juan Ortner & Sylvain Chassang & Jun Nakabayashi & Kei Kawai, 2022. "Screening Adaptive Cartels," Working Papers 2022-23, Princeton University. Economics Department..
    10. Rieko Ishii, 2014. "Bid Roundness Under Collusion in Japanese Procurement Auctions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(3), pages 241-254, May.
    11. Francesco Decarolis, 2009. "When the highest bidder loses the auction: theory and evidence from public procurement," Temi di discussione (Economic working papers) 717, Bank of Italy, Economic Research and International Relations Area.
    12. David Imhof & Hannes Wallimann, 2021. "Detecting bid-rigging coalitions in different countries and auction formats," Papers 2105.00337, arXiv.org.
    13. Palacio, Sebastián M., 2020. "Predicting collusive patterns in a liberalized electricity market with mandatory auctions of forward contracts," Energy Policy, Elsevier, vol. 139(C).

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    More about this item

    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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