Favor exchange in collusion: Empirical study of repeated procurement auctions in Japan

It is known that bid rigging in public-work auctions in Japan often takes the form of exchanging favors. In such a scheme, the winner is designated based on favors he has given to other ring members. By explicitly modeling “favor” as an explanatory variable, this paper analyzes data from the public-works auctions for consulting works in Naha, Japan, to confirm that such a collusion scheme is in operation.