Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions
AU - De Silva, Dakshina G.
AU - Dunne, Timothy
AU - Kosmopoulou, Georgia
PY - 2003/9
Y1 - 2003/9
N2 - 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.
AB - 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.
KW - Auctions
KW - Entry
U2 - 10.1111/1467-6451.00202
DO - 10.1111/1467-6451.00202
M3 - Journal article
VL - 51
SP - 295
EP - 316
JO - Journal of Industrial Economics
JF - Journal of Industrial Economics
IS - 3
ER -