American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Collusion by Exclusion in Public Procurement
American Economic Journal: Microeconomics
(pp. 148–202)
Abstract
This paper studies bid rigging in auctions with bidder preselection. We develop a theoretical model to analyze the optimal behavior of partial bid-rigging cartels and show how commonly used two-stage auction formats, in which the first stage is used to preselect bidders, may be exploited. Based on our theoretical results, we construct a collusion marker reflecting the optimal cartel strategy and, using administrative data on public procurement auctions in Slovakia, we identify bidders suspected of collusion. We show that bidder preselection allows cartels to exclude competitive rivals and thereby increase procurement costs above what would be possible without preselection.Citation
Seibel, Regina, and Samuel Škoda. 2026. "Collusion by Exclusion in Public Procurement." American Economic Journal: Microeconomics 18 (3): 148–202. DOI: 10.1257/mic.20240308Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D44 Auctions
- H57 National Government Expenditures and Related Policies: Procurement
- L12 Monopoly; Monopolization Strategies