Ownership Networks and Bid Rigging Open Access

Using a data set of public procurement auctions and registered shareholders of all bidding firms in Singapore, the authors study the effects of ownership networks on prices and efficiency in product markets. They find participating bidders with common owners or common owners’ owners are more likely to submit identical bids, and the identical bids are associated with higher contract prices. Their structural estimates suggest removing ownership network effects improves a procurer’s cost efficiency. Their findings are robust to falsification tests, bid rounding concerns, placebo tests using other common stakeholder relationships, and weighting based on a machine-learning prediction of the auction format.