Auctions with endogenous participation and quality thresholds : evidence from ODA infrastructure procurement
Infrastructure projects are often technically complicated and highly customized. Therefore, procurement competition tends to be limited. Competition is the single most important factor toward auction efficiency and anti-corruption. However, the degree of competition realized is closely related to bidders'entry decision and the auctioneer's decision on how to assess technical attributes in the bid evaluation process. This paper estimates the interactive effects among quality, entry, and competition. With data on procurement auctions for electricity projects in developing countries, it is found that large electricity works are by nature costly and can attract only a few participants. The limited competition would raise government procurement costs. In addition, high technical requirements are likely to be imposed for these large-scale projects, which will in turn add extra costs for the better quality of works and further limit bidder participation. The evidence suggests that quality is of particular importance in large infrastructure projects and auctioneers cannot easily substitute price for quality.
|Date of creation:||01 Mar 2009|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Klein, 1998.
"Rebidding for Concessions,"
World Bank Other Operational Studies
11524, The World Bank.
- McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347.
- Che, Yeon-Koo & Kim, Jinwoo, 2009.
"Optimal collusion-proof auctions,"
Journal of Economic Theory,
Elsevier, vol. 144(2), pages 565-603, March.
- Antonio Estache & Atsushi Iimi, 2010.
"Bidder Asymmetry in Infrastructure Procurement: Are There any Fringe Bidders?,"
Review of Industrial Organization,
Springer, vol. 36(2), pages 163-187, March.
- Estache, Antonio & Iimi, Atsushi, 2008. "Bidder asymmetry in infrastructure procurement : are there any fringe bidders ?," Policy Research Working Paper Series 4660, The World Bank.
- Antonio Estache & A. Iimi, 2008. "Bidder Asymmetry in Infrastructure Procurement: Are There any Fringe Bidders?," Working Papers ECARES 2008_020, ULB -- Universite Libre de Bruxelles.
- C.E. Moody Jr. & W.J. Kruvant, 1988. "Joint Bidding, Entry, and the Price of OCS Leases," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 276-284, Summer.
- Robert H. Porter & J. Douglas Zona, 1997.
"Ohio School Milk Markets: An Analysis of Bidding,"
NBER Working Papers
6037, National Bureau of Economic Research, Inc.
- Yeon-Koo Che, 1993.
"Design Competition through Multidimensional Auctions,"
RAND Journal of Economics,
The RAND Corporation, vol. 24(4), pages 668-680, Winter.
- Che, Y.K., 1991. "Design Competition through Multidimensional Auctions," Working papers 9123, Wisconsin Madison - Social Systems.
- Hendricks, Kenneth & Porter, Robert H, 1992. "Joint Bidding in Federal OCS Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 506-11, May.
- Estache, Antonio & Guasch, Jose-Luis & Iimi, Atsushi & Trujillo, Lourdes, 2008.
"Multidimensionality and renegotiation : evidence from transport-sector public-private-partnership transactions in Latin America,"
Policy Research Working Paper Series
4665, The World Bank.
- 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, vol. 35(1), pages 41-71, September.
- Robert H. Porter & J. Douglas Zona, 1992.
"Detection of Bid Rigging in Procurement Auctions,"
NBER Working Papers
4013, National Bureau of Economic Research, Inc.
- Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-99, June.
- Patrick Bajari & Robert McMillan & Steven Tadelis, .
"Auctions versus Negotiations in Procurement: An Empirical Analysis,"
02007, Stanford University, Department of Economics.
- Steven Tadelis, 2009. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(2), pages 372-399, October.
- Patrick Bajari & Robert S. McMillan & Steve Tadelis, 2003. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," NBER Working Papers 9757, National Bureau of Economic Research, Inc.
- Atsushi Iimi, 2006. "Auction Reforms for Effective Official Development Assistance," Review of Industrial Organization, Springer, vol. 28(2), pages 109-128, 03.
- Antonio Estache & A. Iimi, 2008.
"Joint Bidding in Infrastructure Procurement,"
Working Papers ECARES
2008_019, ULB -- Universite Libre de Bruxelles.
- Cripps, Martin & Ireland, Norman, 1994. "The Design of Auctions and Tenders with Quality Thresholds: The Symmetric Case," Economic Journal, Royal Economic Society, vol. 104(423), pages 316-26, March.
- Srabana Gupta, 2002. "Competition and collusion in a government procurement auction market," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(1), pages 13-25, March.
- Michael K. Price, 2008. "Using The Spatial Distribution Of Bidders To Detect Collusion In The Marketplace: Evidence From Timber Auctions," Journal of Regional Science, Wiley Blackwell, vol. 48(2), pages 399-417.
- Estache, Antonio & Iimi, Atsushi, 2008.
"Procurement efficiency for infrastructure development and financial needs reassessed,"
Policy Research Working Paper Series
4662, The World Bank.
- Antonio Estache & A. Iimi, 2008. "Procurement Efficiency for Infrastructure Development and Financial Needs Reassessed," Working Papers ECARES 2008_022, ULB -- Universite Libre de Bruxelles.
- Rajiv Vohra & In-Koo Cho & Kevin Jewell, 2002. "A simple model of coalitional bidding," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(3), pages 435-457.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4853. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.