Ownership Networks and Bid Rigging

71 Pages Posted: 27 Dec 2018 Last revised: 6 Oct 2019

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

Date Written: September 1, 2019

Abstract

Using a dataset of public procurement auctions and registered shareholders of all participating firms in Singapore, we study the effects of suppliers' ownership connections on prices and efficiency in the product market. We find identical bidding in the same sealed-bid auction is prevalent and positively correlated with ownership connections among bidders. Moreover, the identical bidding attributable to ownership connections is positively associated with contract price when the lowest bidder wins. Structural estimates based on a model of first-price auctions show the removal of an ownership connection can improve a contractor's cost efficiency by more than it reduces contract price, highlighting how ownership networks hinder competition.

Keywords: Common Ownership, Public Procurement Auctions, Connected Owners, Ownership, Corporate Governance

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

Suggested Citation

Asai, Kentaro and Charoenwong, Ben, Ownership Networks and Bid Rigging (September 1, 2019). 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

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