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The impact of timing on bidding behavior in procurement auctions of contracts with private costs

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  • De Silva, Dakshina G.
  • Kosmopoulou, Georgia
  • Pagel, Beatrice
  • Peeters, Ronald

Abstract

We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique proposed by Racine and Li (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 related to synergies and level of bidder participation.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27355.

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Date of creation: 18 Oct 2010
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Handle: RePEc:pra:mprapa:27355

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Keywords: Multi-unit auctions; Procurement auctions;

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  1. Porter, Robert H & Zona, J Douglas, 1993. "Detection of Bid Rigging in Procurement Auctions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 518-38, June.
  2. Mireia Jofre-Bonet & Martin Pesendorfer, 2003. "Estimation of a Dynamic Auction Game," Econometrica, Econometric Society, Econometric Society, vol. 71(5), pages 1443-1489, 09.
  3. ALBANO, Gian Luigi & GERMANO, Fabrizio & LOVO, Stefano, . "A comparison of standard multi-unit auctions with synergies," CORE Discussion Papers RP -1556, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. De Silva, Dakshina G. & Dunne, Timothy & Kankanamge, Anuruddha & Kosmopoulou, Georgia, 2008. "The impact of public information on bidding in highway procurement auctions," European Economic Review, Elsevier, Elsevier, vol. 52(1), pages 150-181, January.
  5. Philip A. Haile & Han Hong & Matthew Shum, 2003. "Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions," NBER Working Papers 10105, National Bureau of Economic Research, Inc.
  6. Patrick Bajari & Lixin Ye, 2001. "Deciding Between Competition and Collusion," Working Papers, Stanford University, Department of Economics 01008, Stanford University, Department of Economics.
  7. De Silva, Dakshina G. & Kankanamge, Anuruddha & Kosmopoulou, Georgia, 2007. "A change in the timing of auctions with synergies and its impact on bidding behavior," Economics Letters, Elsevier, Elsevier, vol. 95(1), pages 60-65, April.
  8. De Silva, Dakshina G. & Jeitschko, Thomas D. & Kosmopoulou, Georgia, 2005. "Stochastic synergies in sequential auctions," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 23(3-4), pages 183-201, April.
  9. Vijay Krishna & Robert Rosenthal, 1995. "Simultaneous Auctions with Synergies," Papers, Boston University - Industry Studies Programme 0056, Boston University - Industry Studies Programme.
  10. Samuelson, William F., 1985. "Competitive bidding with entry costs," Economics Letters, Elsevier, Elsevier, vol. 17(1-2), pages 53-57.
  11. Jacob K. Goeree & Theo Offerman, 1999. "Competitive Bidding in Auctions with Private and Common Values," Virginia Economics Online Papers 337, University of Virginia, Department of Economics.
  12. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, Econometric Society, vol. 50(5), pages 1089-1122, September.
  13. Donald B. Hausch, 1986. "Multi-Object Auctions: Sequential vs. Simultaneous Sales," Management Science, INFORMS, INFORMS, vol. 32(12), pages 1599-1610, December.
  14. Racine, Jeff & Li, Qi, 2004. "Nonparametric estimation of regression functions with both categorical and continuous data," Journal of Econometrics, Elsevier, Elsevier, vol. 119(1), pages 99-130, March.
  15. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 43-61, January.
  16. Marmer, Vadim & Shneyerov, Artyom & Xu, Pai, 2007. "What Model for Entry in First-Price Auctions? A Nonparametric Approach," Microeconomics.ca working papers, Vancouver School of Economics marmer-07-11-22-02-26-44, Vancouver School of Economics, revised 18 Feb 2011.
  17. Deltas, George & Jeitschko, Thomas D., 2007. "Auction hosting site pricing and market equilibrium with endogenous bidder and seller participation," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 25(6), pages 1190-1212, December.
  18. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(1), pages 249-275, February.
  19. Matthew Shum, 2000. "Nonparametric Tests for Common Values," Econometric Society World Congress 2000 Contributed Papers 1598, Econometric Society.
  20. Robert W. Rosenthal & Ruqu Wang, 1995. "Simultaneous Auctions with Synergies and Common Values," Papers, Boston University - Industry Studies Programme 0060, Boston University - Industry Studies Programme.
  21. Tong Li & Xiaoyong Zheng, 2009. "Entry and Competition Effects in First-Price Auctions: Theory and Evidence from Procurement Auctions," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1397-1429.
  22. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 585-99, June.
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