De Silva, Dakshina G. and Kosmopoulou, Georgia and Lamarche, Carlos (2009) The effect of information on the bidding and survival of entrants in procurement auctions. The Journal of Public Economics, 93 (1-2). pp. 56-72. ISSN 0047-2727Full text not available from this repository.
In government procurement auctions of construction contracts, entrants are typically less informed and bid more aggressively than incumbent firms. This bidding behavior makes them more susceptible to losses affecting their prospect of survival. In April of 2000, the Oklahoma Department of Transportation started releasing the internal cost estimates to complete highway construction projects. Using newly developed quantile regression approaches, this paper examines the impact of the policy change on aggressive entrants. First, we find that the information release eliminates the bidding differential between entrants and incumbents attributed to informational asymmetries. Second, we argue that the policy change affects the prospects of survival of entrants in the market. We find that those who used to exit the market relatively soon are now staying 37% longer, while at the median level bidding duration increased by roughly 68%. The policy has the potential to encourage entry in government procurement auctions and thus increase competition.
|Journal or Publication Title:||The Journal of Public Economics|
|Uncontrolled Keywords:||Auctions ; Entry ; Survival analysis ; Government procurement|
|Departments:||Lancaster University Management School > Economics|
|Deposited On:||08 Feb 2012 09:28|
|Last Modified:||09 Apr 2014 23:03|
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