Analysis On Collusion In Auctions Of Projects With Different Bidding Evaluation Methods

With the continuous increase in our country’s fixed investment and the value created by the industry of architecture, reverse auction is playing a more and more important role in construction realm. However, many problems expose themselves in different parts and steps of the reverse auctions and thus further cause varied forms of collusions, and these problems include lack of supervision, asymmetry of information, lack of stimulation, rent-setting, low cost of rent-seeking, fierce competition, and tough conditions for quitting and etc. Undoubtedly, collusions would damage social welfare and other participants’reasonable interests and would even lead to serious crimes. Based on several common collusion mechanisms conducted under different bidding evaluation methods, this paper has built relative models and further made some analysis from different perspectives. In sum, the research of this paper has theoretical and practical importance. The main work of this paper is as follows:1. Summary and analysis of related backgrounds as well as domestic and foreign literatures were made. Important bidding evaluation methods which took effect in present auction field and their game models were also briefly introduced. All of these were of fundamental importance for the following research.2. Considering a corruptive bidder who had the right of first refusal offered by the auctioneer in the reverse first-price-sealed auction, the game model was built under this special condition. It was proved that honest bidders’maximum problem had a sole and monotonely increasing solution and how the cost valuation affected an honest bidder on his bidding strategy was further discussed. In addition, this paper analyzed the influences the number of the bidders imposed on the auctioneer’s rent-setting profits.3. In the reverse first-price-sealed auction, based on the affiliated bidding’s specific rigging mechanisms, the game model was built, the cartel’s higher and lower bidding strategies, and the effect exerted on the auctions were further analyzed. With the increase in the number of the cartel members, the characteristic of the cartel’s bidding strategies were also discussed, as well as the further influence imposed on the honest bidders.4. Based on the theories of multi-dimensional auctions, this paper built a model considering the auctioneer decided to set rent. The optimal auction mechanism, equilibrium bride and probability of corruption were figured out. The impacts on the corruptive probability exerted by the investigating and punishing efficiencies, the corruptive quality actually conducted by the bidder and the number of participants were also researched.The research of this paper can give certain references to make measures which are aimed to constrain and address the phenomenon of collusions in construction area.