Procurement Auctions with Entry and Uncertain Number of Actual Bidders PDF Download
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Author: Xiaoyong Zheng
Publisher:
ISBN:
Category :
Languages : en
Pages : 406
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Book Description
Author: Xiaoyong Zheng
Publisher:
ISBN:
Category :
Languages : en
Pages : 406
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Book Description
Author: Parente, Diane H.
Publisher: IGI Global
ISBN: 1599046385
Category : Education
Languages : en
Pages : 402
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Book Description
Offers a systematic approach to the examination of online procurement auctions. Growth in online auctions reinforces the need for understanding the factors important in auctions and the caveats that both researchers and practitioners need to know in order to effectively study and use the auction tool.
Author: Dakshina G. De Silva
Publisher:
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
In many procurement auctions bidders do not know how many rivals they face at the time they incur the cost of preparing their bids. We show in a theoretical model that regardless of whether the procurement is characterized by private or by common values an increase in the potential number of bidders may lead to higher procurement costs. This raises potential policy questions of whether and how entry should be encouraged in public procurement auctions.We use evidence from auctions of construction contracts to estimate the effect of an increase in the pool of potential bidders on entry and auction prices when entry and bidding decisions are made sequentially with no knowledge of the number or identity of the actual competitors.
Author: Tong Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Motivated by several interesting features of the highway mowing auction data from Texas Department of Transportation (TDoT), we propose a two-stage procurement auction model with endogenous entry and uncertain number of actual bidders. Our entry and bidding models pro vide several interesting implications. For the first time, we show that even within an independent private value paradigm, as the number of potential bidders increases, bidders equilibrium bidding behavior may become less aggressive because the entry effect is always positive and may dominate the negative competition effect. We also show that it is possible that the relationship between the expected winning bid and the number of potential bidders is non-monotone decreasing as well. We then develop an empirical model of entry and bidding controlling for unobserved auction heterogeneity to analyze the data. The structural estimates are used to quantify the entry effect and the competition effect with regard to the individual bids and the procurement cost, as well as the savings for the government with regard to the procurement cost when the entry cost is reduced.
Author: Dakshina G. De Silva
Publisher:
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: Robert H. Porter
Publisher:
ISBN:
Category : Government purchasing
Languages : en
Pages : 60
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Book Description
Author: James J. Anton
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
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Book Description
In a number of observed procurements, the buyer has employed an auction format that allows for a split-award outcome. We focus on settings where the range of uncertainty regarding scale economies is large and, depending on cost realizations, the efficient allocations include split-award outcomes as well as sole-source outcomes (one active supplier). We examine the price performance and efficiency properties of split-award auctions under asymmetric information. In equilibrium, both award outcomes can occur: the split-award outcome occurs only when it minimizes total costs; sole-source outcomes, however, occur too often from an efficiency viewpoint. With respect to prices, equilibrium bids involve pooling at a common price for the split award, and separation for sole-source awards. The pooling region reduces bidding pressure and allows for relatively high sole-source prices. We provide conditions under which the buyer and suppliers all benefit from a split-award format relative to a winner-take-all unit auction format. We assess the predictions of the model and an extension with data on submitted 'step-ladder' bid prices for a US defense split-award procurement.
Author: Hidenori Takahashi
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Karl-Martin Ehrhart
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The targeted design of auctions has to take behavioral regularities into account. This paper explores whether procurement auction formats can take advantage of bidders' willingness-to-pay-willingness-to-accept disparity. In a laboratory experiment, we compare four different second-price auction formats for procuring a good. The four formats are a sealed-bid auction and three di erent descending-clock auctions. We assume that a bidder's willingness-to-accept exceeds his willingness-to-pay and that, depending on the auction format, a bidder's reference-state shifts such that the bidder's perspective moves from a willingness-to-accept perspective towards a willingness-to-pay perspective, thus inducing aggressive bids. In line with the prediction, auction prices decline across the four formats. In particular, we observe the lowest prices in those two clock auction formats that, at every auction stage, select a bidder as the current leading bidder. We conclude that mechanisms influence the reference state and that auctions that foster reference-state shifts lead to lower payments for the buyer. These results support and generalize findings on sales auctions. However, not all of our findings on procurement auctions mirror findings on sales auctions. Bidders overbid in sealed-bid procurement auctions, which does not mirror the commonly observed overbidding in sealed-bid sales auctions.
Author: Antonio Estache
Publisher:
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
Limited competition has been a serious concern in infrastructure procurement. Importantly, however, there are normally a number of potential bidders initially showing interest in proposed projects. This paper focuses on tackling the question why these initially interested bidders fade out. An empirical problem is that no bids of fading-out firms are observable. They could decide not to enter the process at the beginning of the tendering or may be technically disqualified at any point in the selection process. This paper applies the double selection model to procurement data from road development projects in developing countries and examines why competition ends up restricted. It shows that bidders are self-selective and auctioneers also tend to limit participation depending on the size of contracts. Therefore, limited competition would likely lead to high infrastructure procurement costs.
