Screening Adaptive Cartels
2026-08-27
We propose an equilibrium theory of data-driven antitrust oversight in which regulators launch investigations on the basis of suspicious bidding patterns and cartels can adapt to the statistical screens used by regulators. Our main result establishes that screening for collusion using tests with a low false-positive rate (safe tests) is a robust improvement over laissez-faire. Safe tests do not create new collusive equilibria and do not hurt competitive industries. In addition, safe tests can have strict bite, including unraveling all collusive equilibria in some settings. (JEL D21, D43, D44, K21, L12, L14)