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COLLUSION IN THE HIGHWAY CONSTRUCTION INDUSTRY: ECONOMIC EVIDENCE AS AN INVESTIGATIVE TOOL
Abstract
Collusion in sealed-bid markets produces bidding patterns that will differ from those generated under comparable but competitive circumstances. The primary purpose of this study is to determine whether state purchasing records contain significant evidence of collusion among firms bidding for public asphalt paving contracts in Minnesota. It also seeks to ascertain what support, if any, economic theory provides for the assertion that collusion may be present in the sealed-bid markets for highway construction; whether purchase records of government bodies can be used to identify possible anti-competitive practices in sealed-bid markets; and, whether the evidence produced by the analysis of these records, with respect to Minnesota, is sufficient to justify a more detailed follow-up investigation by state antitrust authorities. In this study a theoretical profile of a "collusion prone" industry is developed and used to evaluate the public sealed-bid market for asphalt paving services in Minnesota. Collusion in this industry is found not only possible, but probable. This part of the research also includes an industry study of asphalt paving services in Minnesota as well as a discussion of how sealed-bidding procedures may inherently facilitate collusion. Minnesota Department of Transportation purchasing records for the years 1977 through 1980 are analyzed with the aid of a multi-stage technique designed to detect bidding patterns which may reflect the presence of collusion. While the results of this analysis generally show rivalry in the industry to be robust, nevertheless, there are traces of possible collusion in several bidding patterns, and, in those instances, follow-up investigation is recommended.
Subject Area
Economics
Recommended Citation
HAAR, BURL WALTER, "COLLUSION IN THE HIGHWAY CONSTRUCTION INDUSTRY: ECONOMIC EVIDENCE AS AN INVESTIGATIVE TOOL" (1983). ETD collection for University of Nebraska-Lincoln. AAI8328173.
https://digitalcommons.unl.edu/dissertations/AAI8328173