Skip to main content
SpringerLink
Log in

Detecting Collusion

  • Published:
Review of Industrial Organization Aims and scope Submit manuscript

Abstract

Detection and deterrence of collusion are longstanding antitrust problems, made difficult because collusive arrangements are usually surreptitious. In this paper, I discuss factors that facilitate or inhibit collusive schemes, as well as circumstances where detection is possible. I describe how industrial organization economists diagnose collusion (both explicit and tacit) among firms.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • S. Albaek P. Mollgaard P. Overgaard (1997) ArticleTitle‘Government Assisted Oligopoly Coordination? A Concrete Case’ Journal of Industrial Economics. 45 429–443

    Google Scholar 

  • Ashenfelter, O., and K. Graddy (2004) ‘Anatomy of the Rise and Fall of a Price-Fixing Conspiracy: Auctions at Sotheby’s and Christie’s’. National Bureau of Economic Research working paper no. 10795.

  • P. Bajari L. Ye (2003) ArticleTitle‘Detecting Collusion in Procurement Auctions’ Review of Economics and Statistics. 85 971–989

    Google Scholar 

  • J. Baker D. Rubinfeld (1999) ArticleTitle‘Empirical Methods in Antitrust Litigation: Review and Critique’ American Law and Economics Review. 1 386–435

    Google Scholar 

  • L. Baldwin R. Marshall J.-F. Richard (1997) ArticleTitle‘Bidder Collusion at Forest Service Timber Auctions’ Journal of Political Economy. 105 657–699

    Google Scholar 

  • S. Borenstein A. Shepard (1996) ArticleTitle‘Dynamic Pricing in Retail Gasoline Markets’ RAND Journal of Economics. 27 429–451

    Google Scholar 

  • T. Bresnahan (1987) ArticleTitle‘Competition and Collusion in the American Automobile Market: The 1955 Price War’ Journal of Industrial Economics. 35 457–482

    Google Scholar 

  • Bresnahan, T. (1989) ‘Empirical Studies of Industries with Market Power’, in R. Schmalensee and R. Willig, eds., Handbook of Industrial Organization. Vol. 2. North-Holland.

  • M. Burns (1986) ArticleTitle‘Predatory Pricing and the Acquisition Cost of Competitors’ Journal of Political Economy 94 266–296

    Google Scholar 

  • Cave, J., and S. Salant (1987) ‘Ca rtels that Vote: Agricultural Marketing Boards and Induced Voting Behavior’, in E. Bailey, ed., Public Regulation. MIT Press.

  • J. Cave S. Salant (1995) ArticleTitle‘Cartel Quotas under Majority Rule’ American Economic Review. 85 82–102

    Google Scholar 

  • W. Comanor M. Schankerman (1976) ArticleTitle‘Identical Bids and Cartel Behavior’ Bell Journal of Economics. 7 281–286

    Google Scholar 

  • P. Cramton J. Schwartz (2000) ArticleTitle‘Collusive Bidding: Lessons from the FCC Spectrum Auctions’ Journal of Regulatory Economics. 17 229–252

    Google Scholar 

  • G. Ellison (1994) ArticleTitle‘Theories of Cartel Stability and the Joint Executive Committee’ RAND Journal of Economics 25 37–57

    Google Scholar 

  • J. Farrell (2000) ‘Renegotiation in Repeated Oligopoly Interaction’ G Myles P Hammond (Eds) Incentives, Organization and Public Economics Oxford University Press Oxford

    Google Scholar 

  • J. Feinstein M. Block F. Nold (1985) ArticleTitle‘Asymmetric Information and Collusive Behavior in Auction Markets’ American Economic Review. 75 441–460

    Google Scholar 

  • D. Genesove W. Mullin (2001) ArticleTitle‘Rules, Communication, and Collusion: Narrative Evidence from the Sugar Institute Case’ American Economic Review. 91 379–398

    Google Scholar 

  • Gertner, R. (1995) ‘Revenue and Efficiency Differences between Sequential and Simultaneous Multiple-Unit Auctions with Limited Competition’. University of Chicago working paper.

  • D. Graham R. Marshall (1987) ArticleTitle‘Collusive Bidder Behavior at Single-Object Second-Price and English Auctions’ Journal of Political Economy. 95 1217–1239

    Google Scholar 

  • E. Green R. Porter (1984) ArticleTitle‘Noncooperative Collusion under Imperfect Price Information’ Econometrica. 52 87–100

    Google Scholar 

  • D. Grether C. Plott (1984) ArticleTitle‘The Effects of Market Practices in Oligopolistic Markets: An Experimental Examination of the Ethyl Case’ Economic Inquiry. 22 479–507

    Google Scholar 

  • J. Haltiwanger J. Harrington (1991) ArticleTitle‘The Impact of Cyclical Demand Movements on Collusive Behavior’ RAND Journal of Economics. 22 89–106

    Google Scholar 

  • K. Hendricks R. Porter (1988) ArticleTitle‘An Empirical Study of an Auction with Asymmetric Information’ American Economic Review. 78 865–883

    Google Scholar 

  • Hendricks, K., R. Porter, and G. Tan (2003) ‘Bidding Rings and the Winner’s Curse: The Case of Federal Offshore Oil and Gas Lease Auctions’. National Bureau of Economic Research working paper no. 9836.

  • E. Hoffman G. Libecap (1994) ‘Political Bargaining and Cartelization in the New Deal: Orange Marketing Orders’ C Goldin G Libecap (Eds) The Regulated Economy: A Historical Approach to Political Economy University of Chicago Press Chicago

    Google Scholar 

  • C. Holt D. Scheffman (1987) ArticleTitle‘Facilitating Practices: The Effects of Advance Notice and Best-Price Policies’ RAND Journal of Economics. 18 187–197

    Google Scholar 

  • M. Levenstein (1994) ArticleTitle‘Price Wars and the Stability of Collusion: A Study of the Pre-World War I Bromine Industry’ Journal of Industrial Economics. 45 117–137

    Google Scholar 

  • G. Mailath P. Zemsky (1991) ArticleTitle‘Collusion in Second Price Auctions with Heterogeneous Bidders’ Games and Economic Behavior. 3 467–503

    Google Scholar 

  • Marshall, R., and L. Marx (2004) ‘Bidder Collusion’, Duke University working paper.

  • P. McAfee J. McMillan (1992) ArticleTitle‘Bidding Rings’ American Economic Review. 82 579–599

    Google Scholar 

  • B. McCutcheon (1997) ArticleTitle‘Do Meetings in Smoke Filled Rooms Facilitate Collusion?’ Journal of Political Economy. 105 330–350

    Google Scholar 

  • P. Milgrom (2000) ArticleTitle‘Putting Auction Theory to Work: The Simultaneous Ascending Auction’ Journal of Political Economy. 108 245–272

    Google Scholar 

  • V. Mund (1960) ArticleTitle‘Identical Bid Prices’ Journal of Political Economy. 68 150–169

    Google Scholar 

  • J. Panzar J. Rosse (1987) ArticleTitle‘Testing for ‘‘Monopoly’’ Equilibrium’ Journal of Industrial Economics. 35 443–456

    Google Scholar 

  • M. Pesendorfer (2000) ArticleTitle‘A Study of Collusion in First-Price Auctions’ Review of Economic Studies. 67 381–411

    Google Scholar 

  • R. Porter (1983) ArticleTitle‘A Study of Cartel Stability: The Joint Executive Committee 1880–1886’ Bell Journal of Economics. 14 301–314

    Google Scholar 

  • R. Porter (1992) ArticleTitle‘Review of Anatomy of an Auction: Rare Books at Ruxley Lodge, 1919 by Arthur Freeman and Janet Ing Freeman’ Journal of Political Economy. 100 433–436

    Google Scholar 

  • R. Porter D. Zona (1993) ArticleTitle‘Detection of Bid Rigging in Procurement Auctions’ Journal of Political Economy. 101 518–538

    Google Scholar 

  • R. Porter D. Zona (1999) ArticleTitle‘Ohio School Milk Markets: An Analysis of Bidding’ RAND Journal of Economics. 30 263–288

    Google Scholar 

  • M. Robinson (1985) ArticleTitle‘Collusion and the Choice of Auction’ RAND Journal of Economics. 16 141–145

    Google Scholar 

  • Scherer, F. M., and D. Ross (1990) Industrial Market Structure and Economic Performance, 3rd edn., MA: Houghton Mifflin.

  • F. Scott Morton (1997) ArticleTitle‘Entry and Predation: British Shipping Cartels 1879–1929’ Journal of Economics and Management Strategy. 6 679–724

    Google Scholar 

  • Smith, R. (1961) ‘The Incredible Electrical Conspiracy’, Fortune, 63, April, 132–180, and May 1961, 161–224.

  • G. Stigler (1964) ArticleTitle‘A Theory of Oligopoly’ Journal of Political Economy. 72 44–61

    Google Scholar 

  • J. Tirole (1988) The Theory of Industrial Organization MIT Press Cambridge

    Google Scholar 

  • D. Weiman R. Levin (1994) ArticleTitle‘Preying for Monopoly? The Case of the Southern Bell Telephone Company, 1894–1912’ Journal of Political Economy. 102 103–126

    Google Scholar 

  • Whinston, M. (2004) ‘Lectures on Antitrust Economics’, Northwestern University working paper.

  • S. Wiggins G. Libecap (1985) ArticleTitle‘Oil Field Unitization: Contractual Failure in the Presence of Imperfect Information’ American Economic Review. 75 368–385

    Google Scholar 

  • C. Wolfram (1998) ArticleTitle‘Strategic Bidding in a Multi-Unit Auction: An Empirical Analysis of Bids to Supply Electricity in England and Wales’ RAND Journal of Economics. 29 703–725

    Google Scholar 

  • C. Wolfram (1999) ArticleTitle‘Measuring Duopoly Power in the British Electricity Spot Market’ American Economic Review. 89 805–826

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Northwestern University, Evanston, Illinois, 60208, U.S.A.

    Robert H. Porter

Authors
  1. Robert H. Porter
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Robert H. Porter.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Porter, R.H. Detecting Collusion. Rev Ind Organ 26, 147–167 (2005). https://doi.org/10.1007/s11151-004-7294-7

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11151-004-7294-7

Keywords

Search

Navigation