Mitchell Centre Seminar Series
| Dates: | 24 February 2016 |
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| Times: | 16:00 - 17:30 |
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| What is it: | Seminar |
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| Organiser: | School of Social Sciences |
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Carlo Morselli, University of Montreal
Network Patterns of Collusion in Quebec's Construction Industry
Summary: Over the past six years, the construction industry in the province of Quebec (Canada) has faced a collusion and corruption scandal. This has led to the creation of a series of agencies and task forces to address this problematic context - for example: 1) a specialized investigative squad with the mandate to crackdown on collusion; 2) a public commission of inquiry which endured for more than three years in order to examine the problem by seeking volunteer or forced testimonies from actors that were suspected to have experience or knowledge of collusive practices; and 3) integrity and ethics agencies that assess new and ongoing public procurement processes in construction across Quebec's main cities. Quebec administrators have clearly cleaned up their act when it comes to monitoring collusive and corrupt practices, but the focus remains largely based on individual cases and anecdotal accounts obtained from informants. The current ongoing research project enters the picture by turning to a mass ensemble of public information which is largely overlooked by administrative and regulatory actors in the province. Integrating such information shifts the analytical focus from a traditional specific-to-general to general-to-specific framework. Over the past 18 months, our team at the Université de Montréal has been coding the ensemble of public procurement bids that are linked to the construction industry. To date, we have created a data set with over 15 000 bids and contracts across 100 Quebec municipalities from 2002 to 2011. Using a variety of economic methods and social network analysis, this project is emerging into the main monitoring system for flagging incidents and patterns of potential collusion in public procurement processes. The current presentation will focus specifically on the social network framework that is being developed. What we have understood at this point is that incidents of collusion are strongly linked to patterns of equivalence between competitors. In short, when two or more competing firms bid (or do not bid) in similar ways (e.g., for similar contracts; with similar prices; and against similar competing firms), things are a little too close for comfort, at least from a regulatory outlook. While the results remain tentative and exploratory at this stage in the project, there are strong indications that a basic focus on structural equivalence and blockmodeling patterns across bidding networks help us identify the first signs of collusive practices. Overall, a flag for collusion should be raised when dominant firms in the industry find themselves concentrated in the same block with lesser or unaffiliated competitors unable to enter. In such instances, the industry's structure is organized in favour of the dominant firms and remains largely out of reach to the authorities that administrate the public procurement process. The project clearly has methodological limits and practical implications that may be discussed during the presentation.
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