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An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions

De Silva, Dakshina G. and Dunne, Timothy and Kosmopoulou, Georgia (2003) An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions. Journal of Industrial Economics, 51 (3). pp. 295-316.

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Abstract

This paper explores differences in the bidding patterns of entrants and incumbents in road construction auctions. We find that entrants bid more aggressively and win auctions with significantly lower bids than incumbents. The differences in their bidding patterns are consistent with a model of auctions in which the distribution of an entrant's costs exhibits greater dispersion than that of an incumbent's and relations of stochastic dominance in the distributions do not persist for the entire range of estimated costs. We also find that more efficient firms bid, on average, more aggressively and firms with greater backlogs bid less aggressively.

Item Type: Article
Journal or Publication Title: Journal of Industrial Economics
Uncontrolled Keywords: Auctions ; Entry
Subjects:
Departments: Lancaster University Management School > Economics
ID Code: 52455
Deposited By: ep_importer_pure
Deposited On: 06 Feb 2012 16:26
Refereed?: Yes
Published?: Published
Last Modified: 09 Apr 2014 23:03
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/52455

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