Molly Lipscomb: Collusion and Bidding Behavior in Sanitation Markets: Evidence from Real Time Auctions in Senegal

Molly Lipscomb of the Batten School will be presenting her work to us at the QC brown bag seminar series next Wednesday, November 4, 12-1pm. The seminar will meet in Gibson 296. The title of Molly’s talk is “Collusion and Bidding Behavior in Sanitation Markets:  Evidence from Real Time Auctions in Senegal.”
We will have sandwiches, chips, cookies, etc., provided by Panera.
Here is the abstract for Molly’s talk: 

“Collusion and Bidding Behavior in Sanitation Markets:  Evidence from Real Time Auctions in Senegal” 

Jean Francois Houde (Wharton), Molly Lipscomb (UVA), and Laura Schechter (UW-Madison)

We institute real-time auctions in Dakar, Senegal for the procurement of desludging services and randomize key design elements of the auctions to measure the level of collusion in the market and to test the impact of increased competition on prices.  We show that while cost factors matter for desludging operators in their bidding there is also evidence suggestive of collusion in their bidding behavior.  Consistent with theoretical predictions, closed-bid auctions have lower clearing prices (but not statistically significantly so).  Desludging operators are more likely to enter closed bid auctions, but on average give higher bids in closed bid auctions when they enter.   

When more operators are invited to enter an auction, the winning bid is lower, but any given desludging operator is less likely to bid in the auction.  Operators who are part of fee based garage-business consortiums submit higher bids than operators working on their own.  The most senior participants in the auction are most likely to bid, but in general bidding tapers off over time with experience with the center.   We also match a subset of operators with business-level survey data;  we show that desludgers are less likely to bid outside of their region, and that the prices that they charge in their region are lower than other regions even controlling for distance from their garage.  Overall, prices go down over time, although at a decreasing rate.