Case study in Shikoku: changes in the bidding behaviour of businesses

Abstract

This study examines the economic rationality of recent bidding behaviour of firms in the Shikoku region and the impact of bid rigging incidents in the Kochi region, based on data from the Shikoku Regional Development Bureau. It also examines the relationship between the entry of firms into the market, the existence of economies of scale, and the efficiency of firms' ability to bid at low prices in relation to the spread of the business area. The results of the analysis address several critical economic questions related to business activity through the bidding behaviour of businesses. The results reveal that: bidding for the entire Shikoku Regional Development Bureau, not just the offices inspected by the Japan Fair Trade Commission (JFTC) on-the-spot investigation rates, fell by approximately 1–2%; and with respect to entry into the market, the entrants were slightly inefficient in terms of their ability to bid at lower prices; and several other things were found out as well. These findings are the basic mechanisms that should be considered in policymaking.