Bid Costs and the (in)efficiency of Public Procurement Auctions PDF Download
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Author: Niels Blomgren-Hansen
Publisher:
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
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
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
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
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: Cesare Dosi
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Michael Klein
Publisher: World Bank Publications
ISBN:
Category : Auctions
Languages : en
Pages : 27
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Book Description
En la última década ha sido práctica común la privatización de empresas gestoras de infraestructura, en sectores como el del transporte, las telecomunicaciones, la energía y el agua. Muy a menudo se adjudican a empresas privadas franquicias monopolistas, mediante concesiones a largo plazo. En este trabajo se analizan aquellas cuestiones relacionadas con el diseño de estos contratos de concesión y su adjudicación a empresas privadas.
Author: Francesco Decarolis
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
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.
Author: Ari Hyytinen
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 85
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Book Description
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: Maria Monica Wihardja
Publisher:
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: Leandro Arozamena
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 56
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Author: Jun Nakabayashi
Publisher:
ISBN:
Category : Endogenous growth (Economics)
Languages : en
Pages : 144
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Book Description
Abstract: Spending approximately 10 percent of the gross domestic product (GDP), governments are the biggest buyer of goods and services for many countries. Sound public procurement policies and practices are essential not only to good governance, but also to a strong and stable economy. On the other hand, due to the fact that more than 99 percent of all businesses are small in most of the countries, the involvement of small businesses are vital for the governments seeking to establish competition, innovation and value for money in the delivery of public goods and services. In fact, small businesses are likely to be disadvantage in production costs and lack in knowledge of available contract opportunities. Moreover, since it naturally would fit better to the small businesses, many of them serve to government contracts as subcontractor. In this thesis, I analyze public procurement auctions both empirically and theoretically, focusing on the role and impact of small businesses in government procurement market.
