European Business Schools Librarian's Group
Working Papers,
Copenhagen Business School, Department of Economics
No 1-2019: Bid Costs and the (In)efficiency of Public Procurement Auctions
Niels Blomgren-Hansen ()
Additional contact information
Niels Blomgren-Hansen: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Abstract: The paper analyzes the excess entry hypothesis for sealed-bid first price public procurement auctions.The hypothesis is proved analytically for any feasible combination of bid preparation cost and bid evaluation cost when the bidders face a rectangular cost density function and confirmed in numerical simulations based on a family of flexible cost density functions. The excess entry hypothesis implies that the procurer may reduce both his own cost and the social cost by imposing a positive fee on the bids. Sequential search is a superior strategy to a public procurement auction whether or not the procurer imposes an optimal fee on the bids.
Keywords: Excess entry; Public procurement auctions; Optimal fee; Sequential search
JEL-codes: D21; D43; D44; L13; L51
23 pages, February 5, 2019
Full text files
9710Full text
- Copenhagen Business School, Department of Economics
- Ordering Working Papers
- Home page for this series
Questions (including download problems) about the papers in this series should be directed to Lars Nondal ()
Report other problems with accessing this service to Sune Karlsson ().
RePEc:hhs:cbsnow:2019_001This page generated on 2024-11-13 04:36:06.