Mechanisms for rent transfers: Subcontracting among military aircraft manufacturers

Models of prototyped and non-prototyped competitions for prime contracts from the U.S. defense department suggest that the latter are much more vulnerable to bid-rigging than are the former. Subcontracting data reveal that pairs of firms who have been rivals in major non-prototyped competitions have a larger number of subcontracts with one another than do other pairs of firms. The analysis concludes that subcontracts may serve as vehicles for division of the spoils of collusive bidding on prime contracts.