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Information Disclosure in Open Non-Binding Procurement Auctions: an Empirical Study

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Listed author(s):
  • Stoll, Sebastian
  • Zöttl, Gregor
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    Abstract

    The outcome of non-binding reverse auctions critically depends on how information is distributed during the bidding process. We use data from a large European procurement platform to study the impact of different information structures, specifically the availability of quality information to the bidders, on buyers' welfare and turnover of the platform. First we show that on the procurement platform considered bidders indeed are aware of their rivals' characteristics and the buyers preferences over those non-price characteristics. In a counterfactual analysis we then analyze the reduction of non-price information available to the bidders. As we find, platform turnovers in the period considered would decrease by around 30%, and the buyers' welfare would increase by the monetary equivalent of around 45% of turnover of the platform.

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    File URL: https://epub.ub.uni-muenchen.de/13112/1/WP_Stoll_Zoettl_2013.pdf
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    Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 13112.

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    Date of creation: Jun 2012
    Handle: RePEc:lmu:muenec:13112
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    Keywords: Procurement; Bidding; Reverse Auctions; Multi-Attribute Auctions; Non-Binding Auctions; Information Disclosure; Structural Estimation;

    Find related papers by JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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    1. Gregory Lewis & Patrick Bajari, 2011. "Procurement Contracting With Time Incentives: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1173-1211.
    2. Leonardo Rezende, 2009. "Biased procurement auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 169-185, January.
    3. Susan Athey & Jonathan Levin, 2001. "Information and Competition in U.S. Forest Service Timber Auctions," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 375-417, April.
    4. John Asker & Estelle Cantillon, 2008. "Properties of scoring auctions," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 69-85.
    5. John Asker & Estelle Cantillon, 2010. "Procurement when price and quality matter," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 1-34.
    6. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2011. "Information Disclosure in Procurement Auctions with Horizontally Differentiated Suppliers," Working Papers - Mathematical Economics 2011-02, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    7. Ching-Hua Chen-Ritzo & Terry P. Harrison & Anthony M. Kwasnica & Douglas J. Thomas, 2005. "Better, Faster, Cheaper: An Experimental Analysis of a Multiattribute Reverse Auction Mechanism with Restricted Information Feedback," Management Science, INFORMS, vol. 51(12), pages 1753-1762, December.
    8. Doni, Nicola & Menicucci, Domenico, 2010. "A note on information revelation in procurement auctions," Economics Letters, Elsevier, vol. 108(3), pages 307-310, September.
    9. Caplin, Andrew & Nalebuff, Barry, 1991. "Aggregation and Imperfect Competition: On the Existence of Equilibrium," Econometrica, Econometric Society, vol. 59(1), pages 25-59, January.
    10. Esther Gal-Or & Mordechai Gal-Or & Anthony Dukes, 2007. "Optimal information revelation in procurement schemes," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 400-418, 06.
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