Complementary Bidding and the Collusive Arrangement: Evidence from an Antitrust Investigation

52 Pages Posted: 23 Oct 2020

See all articles by Adriano De Leverano

Adriano De Leverano

ZEW – Leibniz Centre for European Economic Research

Robert Clark

Queen's University

Decio Coviello

HEC Montreal

Date Written: 2020

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.

Keywords: Auction; Bidding ring; Collusion; Complementary bidding; Clustered bids; Missing bids; Public procurement

JEL Classification: L22, L74, D44, H57

Suggested Citation

De Leverano, Adriano and Clark, Robert and Coviello, Decio, Complementary Bidding and the Collusive Arrangement: Evidence from an Antitrust Investigation (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-052, Available at SSRN: https://ssrn.com/abstract=3716711 or http://dx.doi.org/10.2139/ssrn.3716711

Adriano De Leverano (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Robert Clark

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada

Decio Coviello

HEC Montreal ( email )

3000, chemin de la Cote-Saint-Catherine,
montreal, Quebec H2V3P7
Canada

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