Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals

Economics

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals. / De Silva, Dakshina G.; Jeitschko, Thomas D.; Kosmopoulou, Georgia.
In: Review of Industrial Organization, Vol. 35, No. 1-2, 09.2009, p. 73-93.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

De Silva, DG, Jeitschko, TD & Kosmopoulou, G 2009, 'Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals', Review of Industrial Organization, vol. 35, no. 1-2, pp. 73-93. https://doi.org/10.1007/s11151-009-9223-2

APA

De Silva, D. G., Jeitschko, T. D., & Kosmopoulou, G. (2009). Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals. Review of Industrial Organization, 35(1-2), 73-93. https://doi.org/10.1007/s11151-009-9223-2

Vancouver

De Silva DG, Jeitschko TD, Kosmopoulou G. Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals. Review of Industrial Organization. 2009 Sept;35(1-2):73-93. doi: 10.1007/s11151-009-9223-2

Author

De Silva, Dakshina G. ; Jeitschko, Thomas D. ; Kosmopoulou, Georgia. / Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals. In: Review of Industrial Organization. 2009 ; Vol. 35, No. 1-2. pp. 73-93.

Bibtex

@article{dbb03152d4ff49aebf22653fc544a89c,

title = "Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals",

abstract = "In many procurement auctions bidders do not know how many rivals they face at the time that they incur the cost of preparing their bids. We show in a theoretical model that regardless of whether the procurement is characterized by private or by common values an increase in the potential number of bidders may lead to higher procurement costs. This raises potential policy questions of whether and how entry should be encouraged or limited in public procurement auctions. We use evidence from auctions of construction contracts to estimate the effect of an increase in the pool of potential bidders on entry and auction prices when entry and bidding decisions are made sequentially with no knowledge of the number or identity of the actual competitors.",

keywords = "Auctions, Entry, Bid preparation costs , Common values , Endogenous entry , Private values , Procurement auctions",

author = "{De Silva}, {Dakshina G.} and Jeitschko, {Thomas D.} and Georgia Kosmopoulou",

year = "2009",

month = sep,

doi = "10.1007/s11151-009-9223-2",

language = "English",

volume = "35",

pages = "73--93",

journal = "Review of Industrial Organization",

issn = "0889-938X",

publisher = "Springer Netherlands",

number = "1-2",

}

RIS

TY - JOUR

T1 - Entry and Bidding in Common and Private Value Auctions with an Unknown Number of Rivals

AU - De Silva, Dakshina G.

AU - Jeitschko, Thomas D.

AU - Kosmopoulou, Georgia

PY - 2009/9

Y1 - 2009/9

N2 - In many procurement auctions bidders do not know how many rivals they face at the time that they incur the cost of preparing their bids. We show in a theoretical model that regardless of whether the procurement is characterized by private or by common values an increase in the potential number of bidders may lead to higher procurement costs. This raises potential policy questions of whether and how entry should be encouraged or limited in public procurement auctions. We use evidence from auctions of construction contracts to estimate the effect of an increase in the pool of potential bidders on entry and auction prices when entry and bidding decisions are made sequentially with no knowledge of the number or identity of the actual competitors.

AB - In many procurement auctions bidders do not know how many rivals they face at the time that they incur the cost of preparing their bids. We show in a theoretical model that regardless of whether the procurement is characterized by private or by common values an increase in the potential number of bidders may lead to higher procurement costs. This raises potential policy questions of whether and how entry should be encouraged or limited in public procurement auctions. We use evidence from auctions of construction contracts to estimate the effect of an increase in the pool of potential bidders on entry and auction prices when entry and bidding decisions are made sequentially with no knowledge of the number or identity of the actual competitors.

KW - Auctions

KW - Entry

KW - Bid preparation costs

KW - Common values

KW - Endogenous entry

KW - Private values

KW - Procurement auctions

U2 - 10.1007/s11151-009-9223-2

DO - 10.1007/s11151-009-9223-2

M3 - Journal article

VL - 35

SP - 73

EP - 93

JO - Review of Industrial Organization

JF - Review of Industrial Organization

SN - 0889-938X

IS - 1-2

ER -

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