Debarment and Collusion in Procurement Auctions
52 Pages Posted: 3 May 2018 Last revised: 29 Apr 2021
Date Written: April 29, 2021
This article presents the first experiment exploring the impact of debarments - the exclusion of colluding bidders - on collusion in procurement auctions. We find that debarments and their most common alternative, fines, reduce collusion and bids relative to a market with no sanction. The deterrent effect of debarments increases in their length. However, shorter debarments reduce efficiency and increase the bids of non-debarred bidders. This suggests that debarments that are too lenient may trigger tacit collusion among the bidders who remain in the market, thereby facilitating the very behavior they aim to deter.
Keywords: debarment, collusion, procurement auctions, sanctions
JEL Classification: C92, D03, D44, K21, K42
Suggested Citation: Suggested Citation