Modelling the cost of collusion in the construction industry: A case of China

Within the construction industry, violations of laws and regulations in bidding for construction works are difficult to inhibit. Bidders tend to collude with each other to increase the probability of winning construction projects. To this end, they need to strike a trade-off between costs of collusion and potential benefits from collusion they adopted. This study aims to develop two models, one model used to predict the collusion cost, and another is used to reveal the actual level of fine. 103 collusion cases from China were collected to test the proposed models by regression analysis. The research found that two models both exhibit an upturned positive tendency. The average of the ratio of collusion fine and collusion cost always remained the range of 0 to 0.5. The research findings reveal the changing rule of collusion cost and fine, guide the construction unit to understand the negative impact of collusion fully and provide decision support for relevant government departments in bidding supervision, formulating anti-collusion strategies and related punishment measures.