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Disadvantaged business enterprise goals in government procurement contracting: an analysis of bidding behavior and costs

De Silva, Dakshina G. and Dunne, Timothy and Kosmopoulou, Georgia and Lamarche, Carlos (2012) Disadvantaged business enterprise goals in government procurement contracting: an analysis of bidding behavior and costs. International Journal of Industrial Organization, 30 (4). pp. 377-388.

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Abstract

Programs that encourage the participation of disadvantaged business enterprises (DBE) as subcontractors have been a part of government procurement auctions for over three decades. In this paper, we examine the impact of a program that requires prime contractors to subcontract out a portion of a highway procurement project to DBE firms. We study how DBE subcontracting requirements affect bidding behavior in federally funded projects. Within a symmetric independent private value framework, we use the equilibrium bidding function to obtain the cost distribution of firms undertaking projects either with or without subcontracting goals. We then use nonparametric estimation methods to uncover and compare the cost of firm bidding on a class of asphalt projects related to surface treatment in Texas. The analysis shows little differences in the cost structure between projects that have subcontracting goals and those that do not.

Item Type: Article
Journal or Publication Title: International Journal of Industrial Organization
Uncontrolled Keywords: Affirmative action ; Minority businesses ; Government procurement
Subjects: UNSPECIFIED
Departments: Lancaster University Management School > Economics
ID Code: 52467
Deposited By: ep_importer_pure
Deposited On: 07 Feb 2012 16:47
Refereed?: Yes
Published?: Published
Last Modified: 09 Apr 2014 23:03
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/52467

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