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Seminarios académicos y conferencias

Juan Ortner (Boston University)

Collusion in Auctions with Constrained Bids: Theory and Evidence from Public Procurement

Copautor: Sylvain Chassang

6 Septiembre 2016 - 17 hrs.

Sala 209, Facultad de Ciencias Económicas y Administrativas UC

Ver investigación

We study the mechanics of cartel enforcement and its interaction with bidding constraints in the context of repeated procurement auctions. Under collusion, bidding constraints weaken cartels by limiting the scope for punishment. This yields a test of repeated collusive behavior exploiting the counter-intuitive prediction that introducing minimum prices can lower the distribution of winning bids. The model’s predictions are borne out in procurement data from Japan, where we find considerable evidence that collusion is weakened by the introduction of minimum prices. A robust design insight is that setting minimum price constraints at the bottom of the observed distribution of winning bids necessarily improves over setting no minimum prices.