Working Paper: CEPR ID: DP14563
Authors: Elisabetta Iossa; Simon Loertscher; Leslie Marx; Patrick Rey
Abstract: Collusive schemes by suppliers often take the form of allocating customers or markets among cartel members. We analyze incentives for suppliers to initiate and sustain such a collusive schemes in a repeated procurement setting. We show that, contrary to some prevailing beliefs, staggered (versus synchronized) purchasing does not make collusion more difficult to sustain or initiate. Buyer defensive measures include synchronized rather than staggered purchasing, first-price rather than second-price auctions, more aggressive or secrete reserve prices, longer contract lengths, withholding information, and avoiding observable registration procedures. Inefficiency induced by defensive measures is an often unrecognized social cost of collusive conduct.
Keywords: synchronized vs staggered purchasing; sustainability and initiation of collusion; coordinated effects
JEL Codes: D44; D82; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| staggered procurement contracts (H57) | sustainability of collusion (K21) |
| sustainability of collusion (K21) | initiation of collusive schemes (L12) |
| staggered procurement contracts (H57) | collusion (D74) |
| synchronized contracts (D86) | sustainability of collusion (K21) |
| buyer defensive measures (G34) | collusion (D74) |
| defensive measures (H56) | social cost of collusion (D43) |