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Stochastic Synergies in Sequential Auctions

Research output: Contribution to journalJournal article


Journal publication date04/2005
JournalInternational Journal of Industrial Organization
Number of pages19
Original languageEnglish


We consider sequential construction contracts in which bidders may benefit from one auction to the next due to synergistic tasks across the projects auctioned. Theoretical considerations indicate that winners in the earlier auctions are more likely to participate in later auctions. Moreover, conditional on participation, past winners place lower bids, on average, and are so more likely to win in later auctions. We present evidence in support of these predictions using sequential construction auctions conducted by the Oklahoma Department of Transportation.