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Procurement with costly bidding, optimal shortlisting, and rebates

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  • Fan, Cuihong
  • Wolfstetter, Elmar

Abstract

We consider procurement auctions when bid preparation is costly and shortlisting is adopted. We find that a policy of reimbursing bidding costs is profitable if and only if performance and bidding costs are negatively correlated. Negative rebates dominate positive rebates.

Suggested Citation

  • Fan, Cuihong & Wolfstetter, Elmar, 2008. "Procurement with costly bidding, optimal shortlisting, and rebates," Economics Letters, Elsevier, vol. 98(3), pages 327-334, March.
  • Handle: RePEc:eee:ecolet:v:98:y:2008:i:3:p:327-334
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    References listed on IDEAS

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    Cited by:

    1. Koh, Youngwoo, 2017. "Incentive and sampling effects in procurement auctions with endogenous number of bidders," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 393-426.
    2. İlke Onur & Rasim Özcan & Bedri Taş, 2012. "Public Procurement Auctions and Competition in Turkey," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(3), pages 207-223, May.
    3. Bedri Kamil Onur Tas, 2014. "How to Achieve Efficiency in Public Procurement Auctions," EcoMod2014 6728, EcoMod.
    4. Uwe Dulleck & Jiong Gong & Jianpei Li, 2015. "Contracting for Infrastructure Projects as Credence Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(3), pages 328-345, June.
    5. Hu, Luke, 2012. "Optimal Use of Rewards as Commitment Device When Bidding is Costly," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 377, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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