Abstract:
The construction industry is according to the bribe Payers index from transParency
international the most corruPt industry, well ahead of the defense sector. Corruption and collusion are closely interrelated in the public sector,
they nurture each other. However, collusion does not depend on corruption, it can thrive by itself. A basic question is whether collusion
is mostly a moral or an institutional issue. Using the title “mechanics of collusion” and proving the implied automatic reactions clearly strengthens the argument for an institutional view. There is no freedom of choice in mechanics and accordingly there are no moral issues.
The predominant antecedents of the construction industry (sealed-bid
auctions, competitive environment, large contract volumes) are setting incentives for collusive cooperation. Such a behavior can even be morally defended. Since it is illegal (while extant) in most countries, it can
not be encouraged. However, it is worthwhile to discuss changes to the
procurement process that will set incentives to discourage collusion.
Keywords:
collusion, game theory,
institutions, monopsony
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