This paper examines bidding in auctions for state highway construction contracts, in order to determine whether bid rigging occurred. Detection of collusion is possible because of limited participation in the collusive scheme. Collusion did not take the form of a bid rotation scheme. Instead, several ring members bid on most jobs. One was a serious bidder, and the others submitted phony higher bids. The bids of noncartel firms, as well as their rank distribution, were related to cost measures. In contrast, the rank distribution of higher cartel bids was unrelated to similar cost measures and differed from that of the low cartel bid.

This paper examines bidding in auctions for state highway construction contracts, in order to determine whether bid rigging occurred. Detection of collusion is possible because of limited participation in the collusive scheme. Collusion did not take the form of a bid rotation scheme. Instead, several ring members bid on most jobs. One was a serious bidder, and the other submitted phony higher bids. The bids of noncartel firms, as well as their rank distribution, were related to cost measures. In contrast, the rank distribution of higher cartel bids was unrelated to similar cost measures and differed from that of the low cartel bid. Copyright 1993 by University of Chicago Press.

A study is presented on whether the US Government can increase its revenues from the sale of drainage leases by using a different allocation mechanism. The optimal mechanism is characterized for selling a lease when there is a single informed buyer and a fixed number of uniformed buyers. Implementation and the magnitude of potential revenue gains, if any, are discussed.