Article1980

Competitive Bidding for Contracts under Alternative Auction Procedures

273 citations0/0 files storedJournal of Political Economy

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Auction Theory and Applications Merger and Competition Analysis Public Procurement and Policy

Abstract

This paper presents a game-theoretic analysis of the competition for procurement contracts under different auction procedures. One procedure is a "discriminatory" auction in which contractors simultaneously submit sealed bids, and the lowest bidder wins. The other procedure is a "competitive" auction in which the bid price is lowered sequentially until only one interested bidder remains. The focus is on the effect of changes in procurement procedures and the number of bidders on expected procurement costs. If bidders in this model are risk averse, then the expected procurement cost is lower in a discrimatory auction than in a competitive auction.

Citations in this library

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References

1976Risk Aversion in the Small and in the Large

Cited by

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