Kamikazes in Public Procurements: Bid-Rigging and Real Non-Market Outcomes
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| Alminas ZALDOKAS | |
| Thursday 10 April 2025 at 4:00 - 5:30 pm (Hong Kong time, GMT +8) |
Bid-rigging in public procurements has severe implications for public service quality. We take one ex-post observable bid-rigging strategy to document its effects on Brazil’s public services. In a ‘kamikaze’ strategy in procurement auctions, the lowest bidder withdraws after the auction concludes, allowing the second-lowest bidder to win at higher prices. This pattern occurs in 17 percent of auctions, increasing prices by 18 percent. Shared ownership ties between kamikaze and winning firms suggest coordination of bids. Ultimately, this behavior correlates with adverse real non-price outcomes: higher mortality rates in public hospitals and increased road accidents after maintenance contracts. Our findings reveal how bid-rigging extends beyond fiscal costs and endangers public well-being.
About the speaker
Alminas ZALDOKAS is an Associate Professor of the Department of Finance at HKUST. More>>
Registration
The seminar will be conducted through Zoom. Sign up here.
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