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Econometric tests to detect bid-rigging cartels: does it work?

BP2-STS

    12.06.2017

67

Bid rigging
Detection methods
Screens
Conditional independence test
Exchangeability test
English This paper tests how well the method proposed by Bajari and Ye (2003) performs to detect bidrigging cartels. In the case investigated in this paper, the bid-rigging cartel rigged all contracts during the collusive period, and all firms participated to the bid-rigging cartel. The two econometric tests constructed by Bajari and Ye (2003) produce a high number of false negative results: the tests do not reject the null hypothesis of competition, although they should have rejected it. A robustness analysis replicates the econometric tests on two different sub-samples, composed solely by cover bids. On the first sub-sample, both tests produce again a high number of false negative results. However, on the second sub-sample, one test performs better to detect the bidrigging cartel. The paper interprets these results, discusses alternative methods, and concludes with recommendations for competition agencies.
Collections
Faculty
Faculté des sciences économiques et sociales et du management
Language
  • English
Classification
Economics
Series statement
  • Working Papers SES ; 483
License
License undefined
Identifiers
  • RERO DOC 288965
  • RERO R008666779
Persistent URL
https://folia.unifr.ch/unifr/documents/305651
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