Trajectories of Collusion: A Longitudinal Study of Firm Bid-Rigging

• In Event: Tracking Bid-Rigging and Corruption Schemes Across Space and Time

Abstract

This study examines and compares the trajectories of competitive and collusive firms. The point of departure is the construction sector in the province of Quebec, Canada, which has found itself at the center of a corruption inquiry. While some municipalities have been in the spotlight of the inquiry due to the scale and scope of their collusion, other municipalities have emerged as exemplary competitive markets. The current study relies on longitudinal bidding data across a collusive (Laval) and competitive (Quebec City) market, providing information on the bidding and winning patterns of over 1,000 firms active across these municipalities over a fifteen-year period. Group-based trajectory models are used to uncover distinctive developmental trends of collusive and competitive firms in our data. Finding show evidence for (1) collusive trajectories that are distinct in terms of time path; (2) chronic offenders who are different from less active offenders in terms of their bidding patterns; and (3) competitive firms bidding patterns are distinct from collusive firms. In addition, we examine whether group membership can be predicted based on the arrest records of collusive firms. The results allow us to better understand the trajectories of collusion, and how firms emerge into collusive cartels.

Authors

• Marie Ouellet, University of Montreal

• Carlo Morselli, University of Montreal

• Maxime Reeves-Latour, University of Montreal