ECONOMIC FRAMEWORK FOR UNDERSTANDING COLLUSIVE MARKET BEHAVIOR: ASSESSMENT IN SUPPORT OF VDOT'S ANTITRUST MONITORING AND DETECTION UNIT

An economic framework for understanding collusive market behavior is presented in this paper. It was prepared to provide key background information to the Virginia Department of Transnportation in support of creating an Antitrust Monitoring and Detection Unit within the Construction Division. Although the scope of this paper is confined to economic background and general proposals for hindering collusive behavior in construction markets, an overview of antitrust case law is presented in a paper in this Record by Allen and Culkin, "Legal Aspects of Competitive Construction Market Behavior." The purpose of this paper is to provide a primer on the nature of collusive markets; thus, this paper is directed toward highway construction program managers, rather than professional economists. In addition, the economic and legal reviews serve as necessary background for undertaking an empirical study of highway construction markets in Virginia. The first section of this paper defines market failure, discusses the origin of collusion, and reviews 10 key market characteristics that affect the likelihood of collusion. The second section surveys various methods that have been proposed for deterring collusive practices in highway construction.

• Record URL:
  http://onlinepubs.trb.org/Onlinepubs/trr/1989/1229/1229-008.pdf
• Record URL:
  https://scholar.google.com/scholar_lookup?title=ECONOMIC+FRAMEWORK+FOR+UNDERSTANDING+COLLUSIVE+MARKET+BEHAVIOR%3A+ASSESSMENT+IN+SUPPORT+OF+VDOT%27S+ANTITRUST+MONITORING+AND+DETECTION+UNIT&author=G.+Allen&author=C.+Mills&publication_year=1989
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• Supplemental Notes:
  • This paper appears in Transportation Research Record No. 1229, Economics, Finance, Planning, and Administration. Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved
• Authors:
  • Allen, Gary R
  • Mills, Cheryl
• Publication Date: 1989

Media Info

• Features: References;
• Pagination: p. 71-78
• Monograph Title: Economics, finance, planning, and administration
• Serial:
  • Transportation Research Record
  • Issue Number: 1229
  • Publisher: Transportation Research Board
  • ISSN: 0361-1981

Subject/Index Terms

• TRT Terms: Antitrust laws; Construction industry; Detection and identification; Detectors; Economic factors; Markets; Monitoring; Road construction; Safety
• Uncontrolled Terms: Deterrence
• Old TRIS Terms: Collusion
• Subject Areas: Administration and Management; Construction; Economics; Highways; Law; Safety and Human Factors; I10: Economics and Administration;

Filing Info

• Accession Number: 00495112
• Record Type: Publication
• ISBN: 0309048214
• Files: TRIS, TRB
• Created Date: Jun 30 1990 12:00AM