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Aid and competition in procurement auctions: a case of highway projects

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Author Info
Atsushi Iimi (Japan Bank for International Cooperation (JBIC) Institute and The World Bank, N.W. Washington DC, USA)
Abstract

Auctions have been recognised as an important tool for improving economic efficiency. Aid-related procurement systems are no exception to this. Strengthening competition at procurement auctions lowers contract prices and mitigates the heavy indebtedness of developing countries. Auctions are also instrumental in developing local business and fostering good governance. Using data on procurement auctions for Asian Development Bank-assisted highway projects in China, the equilibrium bid function is estimated. The data indicate that two factors may exert different influences on the equilibrium bid. A common expectation that economies of scale in road construction could lower the average cost of constructing relatively long roads encourages firms to bid aggressively, independently of the degree of auction competition. On the other hand, a pro-competitive effect would be observed only as the number of bidders exceeds eight. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jid.1379
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 19 (2007)
Issue (Month): 7 ()
Pages: 997-1015
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:jintdv:v:19:y:2007:i:7:p:997-1015

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  1. Paarsch, Harry J., 1992. "Deciding between the common and private value paradigms in empirical models of auctions," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 191-215. [Downloadable!] (restricted)
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  2. Srabana Gupta, 2001. "The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry," Review of Industrial Organization, Springer, vol. 19(4), pages 451-465, December. [Downloadable!] (restricted)
  3. Feinstein, Jonathan S & Block, Michael K & Nold, Frederick C, 1985. "Asymmetric Information and Collusive Behavior in Auction Markets," American Economic Review, American Economic Association, vol. 75(3), pages 441-60, June. [Downloadable!] (restricted)
  4. Jofre-Bonet, Mireia & Pesendorfer, Martin, 2000. "Bidding behavior in a repeated procurement auction: A summary," European Economic Review, Elsevier, vol. 44(4-6), pages 1006-1020, May. [Downloadable!] (restricted)
  5. Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-94, March. [Downloadable!] (restricted)
  6. Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
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  7. Hendricks, Kenneth & Porter, Robert H, 1992. "Joint Bidding in Federal OCS Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 506-11, May. [Downloadable!] (restricted)
  8. Wolfstetter, Elmar, 1996. " Auctions: An Introduction," Journal of Economic Surveys, Blackwell Publishing, vol. 10(4), pages 367-420, December.
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  9. Srabana Gupta, 2002. "Competition and collusion in a government procurement auction market," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(1), pages 13-25, March. [Downloadable!] (restricted)
  10. Yeon-Koo Che, 1993. "Design Competition through Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 668-680, Winter. [Downloadable!] (restricted)
  11. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September. [Downloadable!] (restricted)
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  12. Iimi, Atsushi, 2004. "(Anti-)Competitive effect of joint bidding: evidence from ODA procurement auctions," Journal of the Japanese and International Economies, Elsevier, vol. 18(3), pages 416-439, September. [Downloadable!] (restricted)
  13. Fernando Branco, 1997. "The Design of Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 63-81, Spring. [Downloadable!] (restricted)
  14. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer. [Downloadable!] (restricted)
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  15. Mireia Jofre-Bonet & Martin Pesendorfer, 2001. "Estimation of a Dynamic Auction Game," NBER Working Papers 8626, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Cripps, Martin & Ireland, Norman, 1994. "The Design of Auctions and Tenders with Quality Thresholds: The Symmetric Case," Economic Journal, Royal Economic Society, vol. 104(423), pages 316-26, March. [Downloadable!] (restricted)
  17. Kenneth Hendricks & Harry J. Paarsch, 1995. "A Survey of Recent Empirical Work Concerning Auctions," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 403-26, May. [Downloadable!] (restricted)
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  18. Klemperer, Paul, 1998. "Auctions with almost common values: The 'Wallet Game' and its applications," European Economic Review, Elsevier, vol. 42(3-5), pages 757-769, May. [Downloadable!] (restricted)
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