DETECTION OF BID RIGGING IN PROCUREMENT AUCTIONS

This paper examines bidding in auctions for state highway construction contracts, in order to determine whether bid rigging occurred. Detection of collusion is possible because of limited participation in the collusive scheme. Collusion did not take the form of a bid rotation scheme. Instead, several ring members bid on most jobs. One was a serious bidder, and the others submitted phony higher bids. The bids of noncartel firms, as well as their rank distribution, were related to cost measures. In contrast, the rank distribution of higher cartel bids was unrelated to similar cost measures and differed from that of the low cartel bid.