[2606.30470] Swimming in Dark Water: When Cartels Mimic Competition
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Economics > General Economics
arXiv:2606.30470 (econ)
[Submitted on 29 Jun 2026]
Title:Swimming in Dark Water: When Cartels Mimic Competition
Authors:David Imhof, Thierry Madiès, Martin Huber<br>View a PDF of the paper titled Swimming in Dark Water: When Cartels Mimic Competition, by David Imhof and Thierry Madi\`es and Martin Huber
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Abstract:This paper analyzes the internal organization and economic effects of a bid-rigging cartel in the road construction sector of the Swiss canton of Ticino, active from 1999 to 2005. Using exceptionally rich documentary evidence, we reconstruct how cartel members coordinated bids and allocated contracts under a formal agreement known as the 'convention'. We show that, despite the absence of side payments, the cartel implemented a cost-based allocation mechanism that closely approximated the first-best collusive outcome. Regression and machine-learning analyses indicate that observable cost proxies systematically predict both winning bids and bid rankings. The evidence further suggests that cartel members strategically mimicked competitive bidding behavior, allowing them to evade standard econometric detection methods. Using double machine learning, we estimate average overcharges of at least 45\%, and potentially substantially higher, highlighting the significant financial harm caused by this sophisticated form of collusion.
Subjects:
General Economics (econ.GN)
Cite as:<br>arXiv:2606.30470 [econ.GN]
(or<br>arXiv:2606.30470v1 [econ.GN] for this version)
https://doi.org/10.48550/arXiv.2606.30470
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arXiv-issued DOI via DataCite (pending registration)
Submission history<br>From: David Imhof [view email]<br>[v1]<br>Mon, 29 Jun 2026 15:30:49 UTC (51 KB)
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