The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs

The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts that are known to have primarily private costs. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique that was proposed by Racine and Li (J Econom 119(1):99–130, 2004) we find that bidding is more aggressive in a sequential multi-round setting than in a simultaneous single-round format. We explore potential causes for the bidding difference across formats that are related to synergies and the level of bidder participation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs

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Publisher
Springer US
Copyright
Copyright © 2012 by Springer Science+Business Media, LLC.
Subject
Economics / Management Science; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-012-9354-8
Publisher site
See Article on Publisher Site

Abstract

We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts that are known to have primarily private costs. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique that was proposed by Racine and Li (J Econom 119(1):99–130, 2004) we find that bidding is more aggressive in a sequential multi-round setting than in a simultaneous single-round format. We explore potential causes for the bidding difference across formats that are related to synergies and the level of bidder participation.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jun 9, 2012

References

  • Simultaneous vs. sequential sales: Bidder competition and supply uncertainty
    Feng, J.; Chatterjee, K.
  • Competitive bidding in auctions with private and common values
    Goeree, J.; Offerman, T.
  • Entry and competition effects in first-price auctions: Theory and evidence from procurement auctions
    Li, T.; Zheng, X.

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