Titelaufnahme

This paper explores the impact of debarment as a deterrent of collusion in rst-price procurement auctions. We develop a procurement auction model where bidders can form bidding rings, and derive the bidding and collusive behavior under no sanction, debarment and nes. The model's predictions are tested through a lab experiment. We nd that debarment and nes both reduce collusion and bids. The deterrent e ect of debarment increases in its length. However, the debarment of colluding bidders reduces e ciency and increases the bids of non-debarred bidders. The latter suggests that the market size reduction resulting from debarment may trigger tacit collusion.