Fiscal policy

Single Bidders and Tacit Collusion in Highway Procurement Auctions

Kentucky spent over $590 million between 2005 and 2007 on asphalt paving projects. Barrus and Scott analyzed companies’ choices to bid and how much to bid in that period to explore the affect that varying levels of competition had on the price the Commonwealth paid. With a majority of contracts attracting only one bidder these projects cost the Commonwealth between 9.3% and 16.5% more than projects with additional bidders.