Author: Niels Blomgren-Hansen
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ISBN:
Category :
Languages : en
Pages :
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The paper analyzes the excess entry hypothesis for sealed-bid first-price public procurement auctions. The hypothesis is proved analytically for any feasible combination of bid preparation cost and bid evaluation cost when the bidders face a rectangular cost density function and confirmed in numerical simulations based on a family of flexible cost density functions. The excess entry hypothesis implies that the procurer may reduce both his own cost and the social cost by imposing a positive fee on the bids. Sequential search is a superior strategy to a public procurement auction whether or not the procurer imposes an optimal fee on the bids.
Author: Niels Blomgren-Hansen
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ISBN:
Category :
Languages : en
Pages :
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Author: Dakshina G. De Silva
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ISBN:
Category :
Languages : en
Pages : 47
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Book Description
A number of papers in the theoretical auction literature show that the release of information regarding the seller's valuation of an item can cause bidders to bid more aggressively. This widely accepted result in auction theory remains largely untested in the empirical literature. Recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty. We examine the impact of a policy change by the Oklahoma Department of Transportation that led to the release of the state's internal estimate of the costs to complete highway construction projects. We perform a differences-in-differences analysis comparing bidding in Texas, a state that had a uniform policy of revealing the same information all throughout the period of analysis, to bidding in Oklahoma. Our results show that, in comparison to Texas auctions, the average bid in Oklahoma fell after the change in engineers' cost estimate (ECE) policy. This decline in bids was even larger for projects where the common uncertainty in costs is greater. Moreover, the within-auction standard deviation of bids fell after the change in ECE policy with the most significant decline observed again in projects with greater common cost uncertainty.
Author: Ari Hyytinen
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 85
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We analyze a regime change from beauty contests to first-price sealed-bid and scoring auctions, using data on public procurement of cleaning services in Swedish municipalities. In beauty contests, the lowest bid often lost and municipalities left substantial money on the table. The procurement costs were similar before and after the regime change, for two reasons: i) Entry strongly decreases the procurement cost, but did not change. Entry would have decreased with the regime change had the municipalities not adjusted the objects of auctions. ii) Municipalities were less price-sensitive and favored inhouse suppliers in the old regime, leading to more aggressive bidding by others. When the scope for favoritism reduced, these changes balanced each other out. We discuss the implications of our findings for efficiency and welfare.
Author: Cesare Dosi
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Category :
Languages : en
Pages :
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Author: Anders Lunander
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Category :
Languages : en
Pages : 0
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Combinatorial procurement auctions enable suppliers to pass their potential cost synergies on to the procuring entity and may therefore lead to lower costs and enhance efficiency. However, bidders might find it profitable to inflate their stand-alone bids in order to favor their package bids. Using data from standard and combinatorial procurement auctions, we find that bids on individual contracts in simultaneous standard auctions without the option to submit package bids are significantly lower than the corresponding stand-alone bids in combinatorial auctions. Further, no significant difference in procurer's cost as explained by auction format is found.
Author: Maria Monica Wihardja
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ISBN:
Category :
Languages : en
Pages : 57
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Book Description
We provide a positive analysis of the equilibrium bidding and bribing strategies with and without corruption in a first-price, sealed-bid, procurement auction with two-dimensional-type bidders. With corruption, we assume that the quality of the bidders are unobservable and non-contractible ex-post. We show examples of equilibrium bids and bribes of N two-dimensional-type bidders in an incomplete information game where the type space is discrete and strategy space is infinite. The equilibrium bid and bribe decrease in the number of bidders. Moreover, we show that in this auction with corruption, quality is randomly chosen, constraining efficiency. In fact, no mechanism can be efficient in this auction. The empirical study suggests that increasing the number of bidders increases the percentage cost efficiency at a decreasing rate and it starts to decrease the percentage cost efficiency after it reaches a certain number of bidders.
Author: Jörg Budde
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Category :
Languages : en
Pages :
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This paper analyzes the impact of capacity costs on bidding strategies of firms participating in procurement auctions. More efficient firms will invest in advance due to their high probability of winning the auction while less efficient bidders prefer to wait with their investments until the outcome of the auction is known. However, in equilibrium both types of firms include a coverage for their investment costs into their bids and therefore adopt a full cost pricing policy.
Author: Bedri Kamil Onur Tas
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
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Book Description
We empirically investigate the effect of entrants and incumbents on the efficiency of public procurement auctions. We use a unique data set that covers all Turkish public procurement auctions for the years 2004 to 2010. We find that procurement prices of auctions won by entrants are significantly lower. The survival analysis of entrants show that more than half of the entrants cannot survive in the public procurement market and cannot win more than one auction. The average number of wins by incumbent firms is ten compared to three by entrant firms.
Author: Francesco Decarolis
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ISBN:
Category :
Languages : en
Pages : 0
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This article contrasts two auction formats often used in public procurement: first price auctions with ex post screening of bid responsiveness and average bid auctions (ABAs), in which the bidder closest to the average bid wins. The equilibrium analysis reveals that their ranking is ambiguous in terms of revenues, but the ABA is typically less efficient. Using a data set of Italian public procurement auctions run alternately under the two formats, a structural model of bidding is estimated for the subsample of first price auctions and used to quantify the efficiency loss under counterfactual ABAs.
