Testing for Collusion in Asymmetric First-Price Auctions

Autores
Gaurab, Aryal; Gabrielli, Maria Florencia
Año de publicación
2013
Idioma
inglés
Tipo de recurso
artículo
Estado
versión publicada
Descripción
This paper proposes a two-step procedure to detect collusion in asymmetric first-price procurement (auctions). First, we use a reduced form test to short-list bidders whose bidding behavior is at-odds with competitive bidding. Second, we estimate the (latent) cost for these bidders under both competition and collusion setups. Since for the same bid the recovered cost must be smaller under collusion, as collusion increases the mark-up, than under competition, detecting collusion boils down to testing for first-order stochastic dominance, for which we use the classic Kolmogorov Smirnov and Wilcoxon-Mann-Whitney tests. Our bootstrap based Monte Carlo experiments for asymmetric bidders confirm that the procedure has good power to detect collusion when there is collusion. We implement the tests for highway procurement data in California and conclude that there is no evidence of collusion even though the reduced form test supports collusion. This highlights potential pitfalls of inferring collusion based only on reduced form tests.
Fil: Gaurab, Aryal. Australian National University; Australia
Fil: Gabrielli, Maria Florencia. Universidad Nacional de Cuyo. Facultad de Ciencias Económicas. Centro de Investigación Cuyo; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Mendoza; Argentina
Materia
Asymmetric Auctions
Collusion
Nonparametric Testing
Nivel de accesibilidad
acceso abierto
Condiciones de uso
https://creativecommons.org/licenses/by-nc-nd/2.5/ar/
Repositorio
CONICET Digital (CONICET)
Institución
Consejo Nacional de Investigaciones Científicas y Técnicas
OAI Identificador
oai:ri.conicet.gov.ar:11336/3602

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spelling Testing for Collusion in Asymmetric First-Price AuctionsGaurab, AryalGabrielli, Maria FlorenciaAsymmetric AuctionsCollusionNonparametric Testinghttps://purl.org/becyt/ford/5.2https://purl.org/becyt/ford/5This paper proposes a two-step procedure to detect collusion in asymmetric first-price procurement (auctions). First, we use a reduced form test to short-list bidders whose bidding behavior is at-odds with competitive bidding. Second, we estimate the (latent) cost for these bidders under both competition and collusion setups. Since for the same bid the recovered cost must be smaller under collusion, as collusion increases the mark-up, than under competition, detecting collusion boils down to testing for first-order stochastic dominance, for which we use the classic Kolmogorov Smirnov and Wilcoxon-Mann-Whitney tests. Our bootstrap based Monte Carlo experiments for asymmetric bidders confirm that the procedure has good power to detect collusion when there is collusion. We implement the tests for highway procurement data in California and conclude that there is no evidence of collusion even though the reduced form test supports collusion. This highlights potential pitfalls of inferring collusion based only on reduced form tests.Fil: Gaurab, Aryal. Australian National University; AustraliaFil: Gabrielli, Maria Florencia. Universidad Nacional de Cuyo. Facultad de Ciencias Económicas. Centro de Investigación Cuyo; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Mendoza; ArgentinaElsevier2013-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdfhttp://hdl.handle.net/11336/3602Gaurab, Aryal; Gabrielli, Maria Florencia; Testing for Collusion in Asymmetric First-Price Auctions; Elsevier; International Journal of Industrial Organization; 31; 1; 1-2013; 26-350167-7187enginfo:eu-repo/semantics/altIdentifier/url/http://www.sciencedirect.com/science/article/pii/S0167718712001129info:eu-repo/semantics/altIdentifier/doi/10.1016/j.ijindorg.2012.10.002info:eu-repo/semantics/openAccesshttps://creativecommons.org/licenses/by-nc-nd/2.5/ar/reponame:CONICET Digital (CONICET)instname:Consejo Nacional de Investigaciones Científicas y Técnicas2025-09-03T09:58:29Zoai:ri.conicet.gov.ar:11336/3602instacron:CONICETInstitucionalhttp://ri.conicet.gov.ar/Organismo científico-tecnológicoNo correspondehttp://ri.conicet.gov.ar/oai/requestdasensio@conicet.gov.ar; lcarlino@conicet.gov.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:34982025-09-03 09:58:30.247CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicasfalse
dc.title.none.fl_str_mv Testing for Collusion in Asymmetric First-Price Auctions
title Testing for Collusion in Asymmetric First-Price Auctions
spellingShingle Testing for Collusion in Asymmetric First-Price Auctions
Gaurab, Aryal
Asymmetric Auctions
Collusion
Nonparametric Testing
title_short Testing for Collusion in Asymmetric First-Price Auctions
title_full Testing for Collusion in Asymmetric First-Price Auctions
title_fullStr Testing for Collusion in Asymmetric First-Price Auctions
title_full_unstemmed Testing for Collusion in Asymmetric First-Price Auctions
title_sort Testing for Collusion in Asymmetric First-Price Auctions
dc.creator.none.fl_str_mv Gaurab, Aryal
Gabrielli, Maria Florencia
author Gaurab, Aryal
author_facet Gaurab, Aryal
Gabrielli, Maria Florencia
author_role author
author2 Gabrielli, Maria Florencia
author2_role author
dc.subject.none.fl_str_mv Asymmetric Auctions
Collusion
Nonparametric Testing
topic Asymmetric Auctions
Collusion
Nonparametric Testing
purl_subject.fl_str_mv https://purl.org/becyt/ford/5.2
https://purl.org/becyt/ford/5
dc.description.none.fl_txt_mv This paper proposes a two-step procedure to detect collusion in asymmetric first-price procurement (auctions). First, we use a reduced form test to short-list bidders whose bidding behavior is at-odds with competitive bidding. Second, we estimate the (latent) cost for these bidders under both competition and collusion setups. Since for the same bid the recovered cost must be smaller under collusion, as collusion increases the mark-up, than under competition, detecting collusion boils down to testing for first-order stochastic dominance, for which we use the classic Kolmogorov Smirnov and Wilcoxon-Mann-Whitney tests. Our bootstrap based Monte Carlo experiments for asymmetric bidders confirm that the procedure has good power to detect collusion when there is collusion. We implement the tests for highway procurement data in California and conclude that there is no evidence of collusion even though the reduced form test supports collusion. This highlights potential pitfalls of inferring collusion based only on reduced form tests.
Fil: Gaurab, Aryal. Australian National University; Australia
Fil: Gabrielli, Maria Florencia. Universidad Nacional de Cuyo. Facultad de Ciencias Económicas. Centro de Investigación Cuyo; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Mendoza; Argentina
description This paper proposes a two-step procedure to detect collusion in asymmetric first-price procurement (auctions). First, we use a reduced form test to short-list bidders whose bidding behavior is at-odds with competitive bidding. Second, we estimate the (latent) cost for these bidders under both competition and collusion setups. Since for the same bid the recovered cost must be smaller under collusion, as collusion increases the mark-up, than under competition, detecting collusion boils down to testing for first-order stochastic dominance, for which we use the classic Kolmogorov Smirnov and Wilcoxon-Mann-Whitney tests. Our bootstrap based Monte Carlo experiments for asymmetric bidders confirm that the procedure has good power to detect collusion when there is collusion. We implement the tests for highway procurement data in California and conclude that there is no evidence of collusion even though the reduced form test supports collusion. This highlights potential pitfalls of inferring collusion based only on reduced form tests.
publishDate 2013
dc.date.none.fl_str_mv 2013-01
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
http://purl.org/coar/resource_type/c_6501
info:ar-repo/semantics/articulo
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/11336/3602
Gaurab, Aryal; Gabrielli, Maria Florencia; Testing for Collusion in Asymmetric First-Price Auctions; Elsevier; International Journal of Industrial Organization; 31; 1; 1-2013; 26-35
0167-7187
url http://hdl.handle.net/11336/3602
identifier_str_mv Gaurab, Aryal; Gabrielli, Maria Florencia; Testing for Collusion in Asymmetric First-Price Auctions; Elsevier; International Journal of Industrial Organization; 31; 1; 1-2013; 26-35
0167-7187
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/url/http://www.sciencedirect.com/science/article/pii/S0167718712001129
info:eu-repo/semantics/altIdentifier/doi/10.1016/j.ijindorg.2012.10.002
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
https://creativecommons.org/licenses/by-nc-nd/2.5/ar/
eu_rights_str_mv openAccess
rights_invalid_str_mv https://creativecommons.org/licenses/by-nc-nd/2.5/ar/
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:CONICET Digital (CONICET)
instname:Consejo Nacional de Investigaciones Científicas y Técnicas
reponame_str CONICET Digital (CONICET)
collection CONICET Digital (CONICET)
instname_str Consejo Nacional de Investigaciones Científicas y Técnicas
repository.name.fl_str_mv CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicas
repository.mail.fl_str_mv dasensio@conicet.gov.ar; lcarlino@conicet.gov.ar
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score 13.13397