Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 917: Using spatial econometrics to test for collusive behavior in procurement auction data
Mats A. Bergman (), Johan Lundberg (), Sofia Lundberg () and Johan Y. Stake ()
Additional contact information
Mats A. Bergman: Department of Economics, Södertörn University, Postal: Department of Economics, Södertörn University, 141 89 Huddinge, Sweden
Johan Lundberg: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden
Sofia Lundberg: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden
Johan Y. Stake: Department of Economics, Södertörn University, Postal: Department of Economics, Södertörn University, 141 89 Huddinge, Sweden
Abstract: In this paper we evaluate whether spatial econometric techniques can be used to test for collusive bidder behavior in public procurement auctions, using the submitted bids and procurement characteristics. The proposed method is applied to the so-called Swedish asphalt cartel, which was discovered in 2001. As our dataset covers the period 1995-2009, we are able to test for conditional independence between complementary cartel bids before and after the detection. Our estimates show a significant positive correlation between complementary cartel bids during the cartel period, whereas a non-significant (and negative) correlation is shown during the later period. The parameter estimate of interest also differs in magnitude between periods. Hence, we argue that the method suggested can be used to verify or possibly screen for collusive bidding behavior. The main advantage of this method is its relatively small data requirements.
Keywords: Antitrust; Auction; Cartel; Collusion; Complementary bidding; Public procurement; Spatial econometrics; Road re-pavement
25 pages, November 26, 2015
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