THESIS ABSTRACT
"Buyer Resistance to Cartel Conduct" (Job Market Paper)
A common feature of most procurements is that if the bids are viewed as too high a buyer may
make no award and re-auction the project at a later date. In practice, the highest bid that a
buyer accepts is set based on the buyer's own estimate of the project's cost which may or may
not be publicly released prior to bidding. I analyze the role of information disclosure in a twoperiod
procurement model with the following information structure. The sellers' costs have both
private and common components. The common component is known to all the sellers, but the
buyer privately observes only the realization of a noisy signal which is correlated with the sellers'
common cost component. In addition, the buyer is uncertain as to whether he faces a cartel or
noncooperative sellers. I show that in this model the buyer can increase his expected payoff by
following a policy of concealing the signal in the initial round of bidding. Intuitively, if the buyer's
signal is sufficiently correlated with the true costs, then through a policy of concealing his signal,
the buyer can limit the incentives of a low cost cartel to represent itself as high cost. It is also
shown that the disclosure of the signal is irrelevant for the buyer when collusion is not a
possibility. Thus, nondisclosure of the buyer's signal may be viewed as a tool to combat
collusion.
"Cartel versus Merger" (with Vikram Kumar, Robert C. Marshall and Leslie M. Marx)
Abstract
This paper studies a model of diffusion in a fixed, finite connected network. There is
an interested party that knows the quality of the product or idea being propagated and
chooses an implant in the network to influence other agents to buy or adopt. Agents
are either "innovators", who adopt immediately, or rational. Rational consumers buy
if buying rather than waiting maximizes expected utility. We consider the conditions
on the network under which efficient diffusion of the good product with probability
one is a perfect Bayes equilibrium. Centrality measures and the structure of the entire
network are both important. We also discuss various inefficient equilibria.
"Dominant-Firm Conduct by Cartels" (with Robert C. Marshall and Leslie M. Marx)
We document that many cartels, once they have achieved the concordant suppression of withincartel
rivalry, go even further in pursuit of profits by engaging in dominant-firm conduct, while
discordant cartels do not. We construct a model in which a firm that was not invited to join the
cartel, or that chose to remain outside the cartel, can be eliminated by the cartel if the cartel
turns out to be concordant, but not if the cartel turns out to be discordant. This dominant-firm
conduct by a cartel can be an incremental source of profits for cartel members beyond the
narrow suppression of within-cartel rivalry. We discuss policy implications of our work.
"Testing For Collusion in Russian Oil and Gas Auctions" (with Yuriy Horokhivskyy)
We use Russian oil and gas fields auction data for the period 2004-2008 to investigate bidders'
noncompetitive behavior. We first document and analyze two unusual phenomena specific to
the Russian environment: shill bidding and affiliated bidding. The empirical evidence confirms
that affiliated and shill companies do not bid independently. We then test whether the winning
bids are more likely to be generated by noncooperative or collusive behavior. The model is
based on Baldwin, Marshall and Richard (1997). We find that the collusive model markedly
outperforms the noncooperative model. |
