IDEAS home Printed from https://ideas.repec.org/a/eee/mateco/v116y2025ics0304406824001435.html
   My bibliography  Save this article

Quality and price in scoring auctions

Author

Listed:
  • Awaya, Yu
  • Fujiwara, Naoki
  • Szabo, Marton

Abstract

Currently, many governments utilize scoring auctions, a format in which bidders submit both price and quality proposals. The objective is to secure high-quality procurement, even if it results in a higher price. In this paper, we theoretically confirm this trade-off. We compare scoring auctions to traditional auction formats, where the auctioneer first optimally selects the quality, followed by bidders submitting price bids. Our primary result identifies the conditions under which scoring auctions lead to higher quality, albeit at an increased price.

Suggested Citation

  • Awaya, Yu & Fujiwara, Naoki & Szabo, Marton, 2025. "Quality and price in scoring auctions," Journal of Mathematical Economics, Elsevier, vol. 116(C).
  • Handle: RePEc:eee:mateco:v:116:y:2025:i:c:s0304406824001435
    DOI: 10.1016/j.jmateco.2024.103083
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304406824001435
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jmateco.2024.103083?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jun NAKABAYASHI & Yohsuke HIROSE, 2016. "Structural Estimation of the Scoring Auction Model," Discussion papers 16008, Research Institute of Economy, Trade and Industry (RIETI).
    2. Yeon-Koo Che, 1993. "Design Competition through Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 668-680, Winter.
    3. John Asker & Estelle Cantillon, 2010. "Procurement when price and quality matter," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 1-34, March.
    4. John Asker & Estelle Cantillon, 2008. "Properties of scoring auctions," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 69-85, March.
    5. Fernando Branco, 1997. "The Design of Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 63-81, Spring.
    6. Hidenori Takahashi, 2018. "Strategic design under uncertain evaluations: structural analysis of design‐build auctions," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 594-618, September.
    7. Gregory Lewis & Patrick Bajari, 2011. "Procurement Contracting With Time Incentives: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1173-1211.
    8. Antonio Estache & Jose-Luis Guasch & Atsushi Iimi & Lourdes Trujillo, 2009. "Multidimensionality and Renegotiation: Evidence from Transport-Sector Public-Private-Partnership Transactions in Latin America," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 41-71, September.
    9. Takeshi Nishimura, 2015. "Optimal design of scoring auctions with multidimensional quality," Review of Economic Design, Springer;Society for Economic Design, vol. 19(2), pages 117-143, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jorge González Chapela, 2019. "Weight Values, Scoring Rules and Abnormally Low Tenders Criteria in Multidimensional Procurement: Effects on Price," Hacienda Pública Española / Review of Public Economics, IEF, vol. 228(1), pages 55-81, March.
    2. Jason Allen & Robert Clark & Brent Hickman & Eric Richert, 2019. "Resolving Failed Banks: Uncertainty, Multiple Bidding & Auction Design," Staff Working Papers 19-30, Bank of Canada.
    3. Riccardo Camboni Marchi Adani, 2018. "Procuring price and quality using scoring auctions: where do we stand?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 17-36, March.
    4. Takahashi, Hidenori, 2015. "Strategic design under uncertain evaluations : structural analysis of design-build auctions," Working Papers 15-08, University of Mannheim, Department of Economics.
    5. Huang, Yangguang & Xia, Jijun, 2019. "Procurement auctions under quality manipulation corruption," European Economic Review, Elsevier, vol. 111(C), pages 380-399.
    6. Huang, Yangguang, 2019. "An empirical study of scoring auctions and quality manipulation corruption," European Economic Review, Elsevier, vol. 120(C).
    7. Stoll, Sebastian & Zöttl, Gregor, 2012. "Information Disclosure in Dynamic Buyer-Determined Procurement Auctions: An Empirical Study," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62044, Verein für Socialpolitik / German Economic Association.
    8. Chandel, Shivangi & Sarkar, Shubhro, 2023. "Corruption in multidimensional procurement auctions under asymmetry," Economic Modelling, Elsevier, vol. 120(C).
    9. Wenzheng Gao & Daiqiang Zhang & Naibao Zhao, 2021. "Uncertainty In Procurement Contracting With Time Incentives," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1153-1197, August.
    10. Krishnendu Ghosh Dastidar, 2014. "Scoring auctions with non-quasilinear scoring rules," ISER Discussion Paper 0902, Institute of Social and Economic Research, The University of Osaka.
    11. Miller, Nathan H., 2014. "Modeling the effects of mergers in procurement," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 201-208.
    12. Dastidar, Krishnendu Ghosh & Mukherjee, Diganta, 2014. "Corruption in delegated public procurement auctions," European Journal of Political Economy, Elsevier, vol. 35(C), pages 122-127.
    13. Riccardo Camboni Marchi Adani & Paola Valbonesi, 2016. "Favouritism in scoring rule auctions," "Marco Fanno" Working Papers 0210, Dipartimento di Scienze Economiche "Marco Fanno".
    14. Stoll, Sebastian & Zöttl, Gregor, 2012. "Information Disclosure in Open Non-Binding Procurement Auctions: an Empirical Study," Discussion Papers in Economics 13112, University of Munich, Department of Economics.
    15. Albano, Gian Luigi & Cesi, Berardino & Iozzi, Alberto, 2017. "Public procurement with unverifiable quality: The case for discriminatory competitive procedures," Journal of Public Economics, Elsevier, vol. 145(C), pages 14-26.
    16. Stoll, Sebastian & Zöttl, Gregor, 2014. "Transparency in Buyer-Determined Auctions: Should Quality be Private or Public?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 459, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    17. Peter Postl, 2013. "Efficiency versus optimality in procurement," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(2), pages 425-472, June.
    18. Pham, Long & Teich, Jeffrey & Wallenius, Hannele & Wallenius, Jyrki, 2015. "Multi-attribute online reverse auctions: Recent research trends," European Journal of Operational Research, Elsevier, vol. 242(1), pages 1-9.
    19. Peng Hao & Jun-Peng Guo & Eoghan O’Neill & Yong-Heng Shi, 2023. "When Will First-Price Work Well? The Impact of Anti-Corruption Rules on Photovoltaic Power Generation Procurement Auctions," Sustainability, MDPI, vol. 15(4), pages 1-24, February.
    20. Wang, Mingxi & Liu, Shulin, 2014. "Equilibrium bids in practical multi-attribute auctions," Economics Letters, Elsevier, vol. 123(3), pages 352-355.

    More about this item

    Keywords

    Scoring auction; Procurement auction;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:116:y:2025:i:c:s0304406824001435. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jmateco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.