Ownership Networks and Bid Rigging

64 Pages Posted: 27 Dec 2018 Last revised: 8 Jul 2022

See all articles by Kentaro Asai

Kentaro Asai

Australian National University (ANU) - College of Business and Economics

Ben Charoenwong

National University of Singapore - Department of Finance; Chicago Global

Date Written: July 8, 2022

Abstract

Using a dataset of public procurement auctions and registered shareholders of all bidding firms in Singapore, we study the effects of ownership networks on prices and efficiency in product markets. A network-based measure of ownership connections shows that participating bidders with common owners or common owners' owners are more likely to submit identical bids, and identical bids are positively correlated with contract prices. Our structural estimates show that removing ownership network effects can improve a contractor's cost efficiency by more than it reduces contract price, highlighting how ownership networks can hinder competition. Our findings are robust to falsification tests, bid rounding, placebo tests using other common stakeholder relationships, and sample weighting based on our machine learning prediction of the auction format.

Keywords: Common Ownership, Public Procurement Auctions, Corporate Governance

JEL Classification: D44, G32, L14, L41, H57

Suggested Citation

Asai, Kentaro and Charoenwong, Ben, Ownership Networks and Bid Rigging (July 8, 2022). Available at SSRN: https://ssrn.com/abstract=3298152 or http://dx.doi.org/10.2139/ssrn.3298152

Kentaro Asai

Australian National University (ANU) - College of Business and Economics ( email )

Canberra
Australia

Ben Charoenwong (Contact Author)

National University of Singapore - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://bizfaculty.nus.edu/faculty-profiles/519-ben

Chicago Global ( email )

67 AYER RAJAH CRESCENT, #02-10/17, Singapore
Singapore, 139950
Singapore

HOME PAGE: http://chicago.global

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