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The effect of information on the bidding and survival of entrants in procurement auctions

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

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The effect of information on the bidding and survival of entrants in procurement auctions. / De Silva, Dakshina G.; Kosmopoulou, Georgia; Lamarche, Carlos.
In: Journal of Public Economics, Vol. 93, No. 1-2, 02.2009, p. 56-72.

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

Harvard

De Silva, DG, Kosmopoulou, G & Lamarche, C 2009, 'The effect of information on the bidding and survival of entrants in procurement auctions', Journal of Public Economics, vol. 93, no. 1-2, pp. 56-72. https://doi.org/10.1016/j.jpubeco.2008.05.001

APA

De Silva, D. G., Kosmopoulou, G., & Lamarche, C. (2009). The effect of information on the bidding and survival of entrants in procurement auctions. Journal of Public Economics, 93(1-2), 56-72. https://doi.org/10.1016/j.jpubeco.2008.05.001

Vancouver

De Silva DG, Kosmopoulou G, Lamarche C. The effect of information on the bidding and survival of entrants in procurement auctions. Journal of Public Economics. 2009 Feb;93(1-2):56-72. doi: 10.1016/j.jpubeco.2008.05.001

Author

De Silva, Dakshina G. ; Kosmopoulou, Georgia ; Lamarche, Carlos. / The effect of information on the bidding and survival of entrants in procurement auctions. In: Journal of Public Economics. 2009 ; Vol. 93, No. 1-2. pp. 56-72.

Bibtex

@article{b89fc97af4db4c6eb2bd27fde41edbb2,
title = "The effect of information on the bidding and survival of entrants in procurement auctions",
abstract = "In government procurement auctions of construction contracts, entrants are typically less informed and bid more aggressively than incumbent firms. This bidding behavior makes them more susceptible to losses affecting their prospect of survival. In April of 2000, the Oklahoma Department of Transportation started releasing the internal cost estimates to complete highway construction projects. Using newly developed quantile regression approaches, this paper examines the impact of the policy change on aggressive entrants. First, we find that the information release eliminates the bidding differential between entrants and incumbents attributed to informational asymmetries. Second, we argue that the policy change affects the prospects of survival of entrants in the market. We find that those who used to exit the market relatively soon are now staying 37% longer, while at the median level bidding duration increased by roughly 68%. The policy has the potential to encourage entry in government procurement auctions and thus increase competition.",
keywords = "Auctions, Entry, Survival analysis, Government procurement",
author = "{De Silva}, {Dakshina G.} and Georgia Kosmopoulou and Carlos Lamarche",
year = "2009",
month = feb,
doi = "10.1016/j.jpubeco.2008.05.001",
language = "English",
volume = "93",
pages = "56--72",
journal = "Journal of Public Economics",
issn = "0047-2727",
publisher = "Elsevier",
number = "1-2",

}

RIS

TY - JOUR

T1 - The effect of information on the bidding and survival of entrants in procurement auctions

AU - De Silva, Dakshina G.

AU - Kosmopoulou, Georgia

AU - Lamarche, Carlos

PY - 2009/2

Y1 - 2009/2

N2 - In government procurement auctions of construction contracts, entrants are typically less informed and bid more aggressively than incumbent firms. This bidding behavior makes them more susceptible to losses affecting their prospect of survival. In April of 2000, the Oklahoma Department of Transportation started releasing the internal cost estimates to complete highway construction projects. Using newly developed quantile regression approaches, this paper examines the impact of the policy change on aggressive entrants. First, we find that the information release eliminates the bidding differential between entrants and incumbents attributed to informational asymmetries. Second, we argue that the policy change affects the prospects of survival of entrants in the market. We find that those who used to exit the market relatively soon are now staying 37% longer, while at the median level bidding duration increased by roughly 68%. The policy has the potential to encourage entry in government procurement auctions and thus increase competition.

AB - In government procurement auctions of construction contracts, entrants are typically less informed and bid more aggressively than incumbent firms. This bidding behavior makes them more susceptible to losses affecting their prospect of survival. In April of 2000, the Oklahoma Department of Transportation started releasing the internal cost estimates to complete highway construction projects. Using newly developed quantile regression approaches, this paper examines the impact of the policy change on aggressive entrants. First, we find that the information release eliminates the bidding differential between entrants and incumbents attributed to informational asymmetries. Second, we argue that the policy change affects the prospects of survival of entrants in the market. We find that those who used to exit the market relatively soon are now staying 37% longer, while at the median level bidding duration increased by roughly 68%. The policy has the potential to encourage entry in government procurement auctions and thus increase competition.

KW - Auctions

KW - Entry

KW - Survival analysis

KW - Government procurement

U2 - 10.1016/j.jpubeco.2008.05.001

DO - 10.1016/j.jpubeco.2008.05.001

M3 - Journal article

VL - 93

SP - 56

EP - 72

JO - Journal of Public Economics

JF - Journal of Public Economics

SN - 0047-2727

IS - 1-2

ER -