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

  • Stoll, Sebastian
  • Zöttl, Gregor
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    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: http://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
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    Handle: RePEc:lmu:muenec:13112
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    1. 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.
    2. Patrick Bajari & Gregory Lewis, 2009. "Procurement Contracting with Time Incentives: Theory and Evidence," NBER Working Papers 14855, National Bureau of Economic Research, Inc.
    3. Asker, John & Cantillon, Estelle, 2004. "Properties of Scoring Auctions," CEPR Discussion Papers 4734, C.E.P.R. Discussion Papers.
    4. Levin, Jonathan & Athey, Susan, 2001. "Information and Competition in U.S. Forest Service Timber Auctions," Scholarly Articles 3612768, Harvard University Department of Economics.
    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. Leonardo Rezende, 2009. "Biased procurement auctions," Economic Theory, Springer, vol. 38(1), pages 169-185, January.
    7. 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.
    8. Andrew Caplin & Barry Nalebuff, 1990. "Aggregation and Imperfect Competition: On the Existence of Equilibrium," Cowles Foundation Discussion Papers 937, Cowles Foundation for Research in Economics, Yale University.
    9. Doni, Nicola & Menicucci, Domenico, 2010. "A note on information revelation in procurement auctions," Economics Letters, Elsevier, vol. 108(3), pages 307-310, September.
    10. 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.
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