Let's Talk about Bidding!
Coordination Mechanisms in Procurement Auctions
Collusive agreements are often observed in procurement auctions. They are probably more easily achieved when competitors' costs are easily estimated. If, however, the individual costs of bidders are private information, effective ring formation is difficult to realize. We compare experimentally different coordination mechanisms in a first-price procurement auction in how they promote the prospects of collusive arrangements. One mechanism allows bidders to coordinate by means of unrestricted pre-play communication. The second one enables bidders to restrict their bidding range and the last one gives them the opportunity to implement mutual shareholding. According to our results first-price procurement is quite collusion-proof when allowing for the latter two coordination mechanisms whereas, on average, pre-play communication increases bidders' profits.
Copyright (c) 2006 Working Paper Series
Dieses Werk steht unter der Lizenz Creative Commons Namensnennung - Weitergabe unter gleichen Bedingungen 4.0 International.