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On the competitive effects of screening in procurement

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Listed:
  • Adam Pigoñ
  • Gyula Seres

Abstract

Procuring authorities frequently use screening in order to mitigate risky bids. This study estimates the effect of bid screening and litigation on entry and bidding using a unique data set on highway construction procurement auctions in Poland. The market exhibits a screening method that ex post selects eligible offers. We demonstrate with an empirical model that this method disproportionately affects small firms and creates a barrier to entry. Our results suggest that screening increases bids by two channels. First, it directly inates bids as well as decreasing entry. Second, in a competitive market, lower entry also inates bids and prices.

Suggested Citation

  • Adam Pigoñ & Gyula Seres, 2019. "On the competitive effects of screening in procurement," IBS Working Papers 08/2019, Instytut Badan Strukturalnych.
    • Handle: RePEc:ibt:wpaper:wp082019
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    References listed on IDEAS

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    More about this item

    Keywords

    Procurement; Auctions; Market Design; Litigation;
    All these keywords.

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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