Gian Luigi Albano (Italian Public Procurement Agency (Consip S.p.A.)) Federico Dini (Italian Public Procurement Agency (Consip S.p.A.)) Roberto Zampino (Italian Public Procurement Agency (Consip S.p.A.))
Abstract
Competitive bidding (as auctions) is commonly used to procure goods and services. Public buyers are often mandated by law to adopt competitive procedures to ensure transparency and promote full competition. Recent theoretical literature, however, suggests that open competition can perform poorly in allocating complex projects. In exploring the determinants of suppliers’ bidding behavior in procurement auctions for complex IT services, we find results that are consistent with theory. We find that price and quality do not exhibit the classical tradeoff one would expect: quite surprisingly, high quality is associated to low prices. Furthermore, while quality is mainly driven by suppliers’ experience, price is affected more by the scoring rule and by the level of expected competition. These results might suggest that (scoring) auctions fail to appropriately incorporate buyers’ complex price/quality preferences in the tender design.
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Publisher Info
Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2008.86.
Find related papers by JEL classification: D44 - Microeconomics - - Market Structure and Pricing - - - Auctions D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
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