Cartels, Competition and Public Procurement

Cartels, Competition and Public Procurement

Law and Economics Approaches to Bid Rigging

New Horizons in Competition Law and Economics series

Stefan E. Weishaar

Stefan Weishaar explores the ways in which economic theory can be used to mitigate the adverse effects of bid rigging cartels. The study sheds light on one of the vital issues for achieving cost-effective public procurement – which is itself a critical question in the context of the global financial crisis. The book comprehensively examines whether different laws deal effectively with bid rigging and the ways in which economic theory can be used to mitigate the adverse effects of such cartels. The employed industrial economics and auction theory highlights shortcomings of the law in all three jurisdictions – the European Union, China and Japan – and seeks to raise the awareness of policymakers as to when extra precautionary measures against bid rigging conspiracies should be taken.

Chapter 11: Limits of economic theories and concluding remarks

Stefan E. Weishaar

Subjects: economics and finance, competition policy, law and economics, public finance, law - academic, competition and antitrust law, law and economics, politics and public policy, public policy


This book has been pointing towards varying degrees of under-deterrence regarding bid rigging cartels in the EU, China and Japan. This suggests that there are situations where it pays for companies to engage in cartelization. As a result, procuring entities must take extra precautions to avoid becoming financially damaged. The costs to society caused by bid rigging cartels can be very sizable and, in times of tight fiscal restraint and the current debt crisis, finding ways to reduce wastage in limited government resources is becoming ever more important. In the earlier part of this book the issue of whether the legislation in the three selected jurisdictions follows auction theoretic and industrial economics insights was examined together with the ways in which these economic insights may be used to prevent falling prey to bid rigging conspiracies. A static industrial economic analysis, such as that presented for the construction industry in Japan, allows tendering authorities to assess the susceptibility of an industry to engage in bid riggings. Procuring entities can then take additional precautions in order not to suffer financial loss.

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