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Complementary bidding and the collusive arrangement: Evidence from an antitrust investigation

Author

Listed:
  • Robert Clark

    (Queen's University)

  • Decio Coviello

    (HEC Montreal)

  • Adriano De Leverano

    (ZEW - Leibniz Centre for European Economic Research in Mannheim)

Abstract
A number of recent papers have proposed that a pattern of isolated winning bids may be associated with collusion. In contrast, others have suggested that bid clustering, especially of the two lowest bids, is indicative of collusion. In this paper, we present evidence from an actual procurement cartel uncovered during an anticollusion investigation that reconciles these two points of view and shows that both patterns arise naturally together as part of a cartel arrangement featuring complementary bidding. Using a difference-in-difference approach, we compare the extent of winning-bid isolation and clustering of bids in Montreal's asphalt industry before and after the investigation to patterns over the same time span in Quebec City, whose asphalt industry has not been the subject of collusion allegations. Our findings provide causal evidence that the collusive arrangement featured both clustering and isolation. We use information from testimony of alleged participants in the cartels to explain how these two seemingly contradictory patterns can be harmonized.

Suggested Citation

  • Robert Clark & Decio Coviello & Adriano De Leverano, 2020. "Complementary bidding and the collusive arrangement: Evidence from an antitrust investigation," Working Paper 1446, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1446
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1446.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bruno Baranek & L. Musolff & Vitezslav Titl, 2021. "Detection of Collusive Networks in E-procurement," Working Papers 2111, Utrecht School of Economics.
    2. Cappelletti, Matilde & Giuffrida, Leonardo M., 2021. "Procuring survival," ZEW Discussion Papers 21-093, ZEW - Leibniz Centre for European Economic Research.
    3. Sylvain Chassang & Kei Kawai & Jun Nakabayashi & Juan Ortner, 2022. "Robust Screens for Noncompetitive Bidding in Procurement Auctions," Econometrica, Econometric Society, vol. 90(1), pages 315-346, January.

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    More about this item

    Keywords

    Auction; Bidding ring; Collusion; Complementary bidding; Clustered bids; Missing bids; Public procurement;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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