ANALYSYS OF “DANGOU” BY GAME THEORY

Abstract

In early 1990s, there happened many cases of “dangou”, or unfair trade on public works bidding. Due to both of these cases and the request from foreign countries for the opening of the construction market of Japan, an objective, transparent and competitive procedure of bidding and contract have been eagerly sought in Japan.“Action Plan for Improvement of Bidding and Contract Procedures in Public Works” was decided at the Cabinet in June, 1994, which proposes to give more severe penalty for the unfair trade, for example. Due to that it is very much difficult to obtain an objective data on unfair trade because of its nature, there have been few theoretical analysis on this subject. Supposing that thee “dangou” is a pure economic behavior, the paper analyzes the behavior using Game Theory.