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The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs

Research output: Contribution to journalJournal article

Published

Journal publication date05/2013
JournalReview of Industrial Organization
Journal number3
Volume42
Number of pages23
Pages321-343
Original languageEnglish

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.