  Collusion among bidders adversely affects procurement cost and in some cases
efficiency, and it seems collusion is more prevalent that we would like.
Statistical methods of detecting collusion just using bid data, in a hope to
deter future collusion, is perilous, and access to additional data is rare and
often always after the fact. In this paper, we estimate the extra cost of
implementing a new procurement rule proposed by Chen and Micali [2012] that is
robust to collusion and always guarantees the efficient outcome. The rule
requires bidders to report their coalition and to ensure
incentive-compatibility, the mechanism allows them to attain rents. We estimate
this rent using data from California highway construction and find it to be
anywhere between 1.6% to 5%. Even after we factor in the marginal excess burden
of taxes needed to finance these rents, the cost ranges between 2.08% and 6.5%,
suggesting that there is a room to think about running this new auction,
suggesting we should consider this auction.
