Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/194174 
Year of Publication: 
2018
Series/Report no.: 
Discussion Papers of the Max Planck Institute for Research on Collective Goods No. 2018/5
Publisher: 
Max Planck Institute for Research on Collective Goods, Bonn
Abstract: 
This paper explores the impact of debarment as a deterrent of collusion in first-price procurement auctions. We develop a procurement auction model where bidders can form bidding rings, and derive the bidding and collusive behavior under no sanction, debarment and fines. The model's predictions are tested through a lab experiment. We find that debarment and fines both reduce collusion and bids. The deterrent effect of debarment increases in its length. However, the debarment of colluding bidders reduces effciency and increases the bids of non-debarred bidders. The latter suggests that the market size reduction resulting from debarment may trigger tacit collusion.
Subjects: 
debarment
collusion
procurement auctions
procurement law
sanctions
JEL: 
C92
D03
D44
K21
K42
Document Type: 
Working Paper

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