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Detection of Collusive Networks in E-procurement

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U.S.E. Research Institute Working Paper Series 21-11

Detection of Collusive Networks in E-procurement

Bruno Baránek

1

Leon Musolff

1

Vitezslav Titl

2

1

Princeton University

2

Utrecht University School of Economics Utrecht University July, 2021

Abstract

Collusion likely has adverse effects on social welfare. In this paper, we study

collusion in the e-procurement market in Ukraine. We document that the bidding

patterns in the data are incompatible with a competitive equilibrium. We develop a

novel structural test to detect pairs and, thereby, networks of collusive firms. We

validate the soundness of our collusion detection algorithm on a sample of 863

prosecuted collusive firms that participated in 23,515 tenders.

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