Law and Economics Approaches to Bid Rigging
- New Horizons in Competition Law and Economics series
Chapter 11: Limits of economic theories and concluding remarks
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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