The impact of timing on bidding behavior in procurement auctions of contracts with private costs

De Silva, Dakshina and Kosmopoulou, Georgia and Pagel, Beatrice and Peeters, Ronald (2013) The impact of timing on bidding behavior in procurement auctions of contracts with private costs. Review of Industrial Organization, 42 (3). pp. 321-343. ISSN 0889-938X

Abstract

We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts that are known to have primarily private costs. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique that was proposed by Racine and Li (J Econom 119(1):99–130, 2004) we find that bidding is more aggressive in a sequential multi-round setting than in a simultaneous single-round format. We explore potential causes for the bidding difference across formats that are related to synergies and the level of bidder participation.