We study entry and bidding in procurement auctions where
contracts are awarded to the bid closest to a trimmed average bid.
These auctions, common in public procurement, create incentives
to coordinate bids to manipulate the bid distribution. We present
statistical tests to detect coordinated entry and bidding choices. The
tests perform well in a validation dataset where a court case makes
coordination observable. We use the tests to detect coordination in a
larger dataset where it is suspected, but not known. The results are
used to interpret a major market shakeout following a switch to first
price auctions. (JEL D44, D47, H57, R42)
Conley, Timothy G., and Francesco Decarolis.
"Detecting Bidders Groups in Collusive Auctions."
American Economic Journal: Microeconomics,
National Government Expenditures and Related Policies: Procurement
Transportation Economics: Government and Private Investment Analysis; Road Maintenance, Transportation Planning