- Title
- Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach
- Author(s)
- Kei Kawai Kei Kawai (UC Berkeley)
- Jun Nakabayashi Jun Nakabayashi (Kindai University)
- Juan Ortner Juan Ortner (Boston University)
- Sylvain Chassang Sylvain Chassang (Princeton University)
- Abstract
- Cartels participating in procurement auctions frequently use bid rotation or incumbency priority to allocate market shares. However, establishing a tight link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such behavior. We show that by focusing on the set of auctions in which the winning and losing bids are very close, it is possible to distinguish allocation patterns reflecting cost differences across firms from patterns reflecting noncompetitive behavior. We apply our tests to two datasets: the sample of Ohio school milk auctions studied in Porter and Zona (1999), and a sample of municipal procurement auctions held in Japan.
- Creation Date
- 2021-12
- Section URL ID
- Paper Number
- 2021-76
- URL
- https://www.sylvainchassang.org/assets/papers/regression_discontinuity.pdf
- File Function
- Jel
- D40, D43
- Keyword(s)
- procurement, collusion, backlog, incumbency, regression discontinuity, antitrust
- Suppress
- false
- Series
- 13