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COMPARING PUBLIC PROCUREMENT AUCTIONS
Author(s) -
Decarolis Francesco
Publication year - 2018
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12274
Subject(s) - common value auction , bidding , counterfactual thinking , procurement , unique bid auction , microeconomics , ranking (information retrieval) , revenue , set (abstract data type) , economics , auction theory , business , econometrics , computer science , finance , philosophy , epistemology , machine learning , programming language , management
This article contrasts two auction formats often used in public procurement: first price auctions with ex post screening of bid responsiveness and average bid auctions (ABAs), in which the bidder closest to the average bid wins. The equilibrium analysis reveals that their ranking is ambiguous in terms of revenues, but the ABA is typically less efficient. Using a data set of Italian public procurement auctions run alternately under the two formats, a structural model of bidding is estimated for the subsample of first price auctions and used to quantify the efficiency loss under counterfactual ABAs.