Using Spatial Econometrics to Test for Collusive Behavior in Procurement Auction Data

25 Pages Posted: 1 Dec 2015 Last revised: 2 Dec 2015

See all articles by Sofia Lundberg

Sofia Lundberg

University of Umea - Department of Economics

Mats Bergman

Södertörn University, Stockholm

Johan Lundberg

Independent

Johan Stake

Independent

Date Written: November 27, 2015

Abstract

In this paper we evaluate whether spatial econometric techniques can be used to test for collusive bidder behavior in public procurement auctions, using the submitted bids and procurement characteristics. The proposed method is applied to the so-called Swedish asphalt cartel, which was discovered in 2001. As our dataset covers the period 1995-2009, we are able to test for conditional independence between complementary cartel bids before and after the detection. Our estimates show a significant positive correlation between complementary cartel bids during the cartel period, whereas a non-significant (and negative) correlation is shown during the later period. The parameter estimate of interest also differs in magnitude between periods. Hence, we argue that the method suggested can be used to verify or possibly screen for collusive bidding behavior. The main advantage of this method is its relatively small data requirements.

Keywords: Antitrust, Auction, Cartel, Collusion, Complementary bidding, Public procurement, Spatial econometrics, Road re-pavement

JEL Classification: D44, H57, L10, L40

Suggested Citation

Lundberg, Sofia and Bergman, Mats A. and Lundberg, Johan and Stake, Johan, Using Spatial Econometrics to Test for Collusive Behavior in Procurement Auction Data (November 27, 2015). Available at SSRN: https://ssrn.com/abstract=2696895 or http://dx.doi.org/10.2139/ssrn.2696895

Sofia Lundberg (Contact Author)

University of Umea - Department of Economics ( email )

Umeå University
Umea, SE - 90187
Sweden

Mats A. Bergman

Södertörn University, Stockholm ( email )

Alfred Nobels allé 7, Flemingsberg
Stockholm, Stockholm 14189
Sweden

Johan Lundberg

Independent ( email )

Johan Stake

Independent ( email )

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