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BIDS AND COSTS IN COMBINATORIAL AND NONCOMBINATORIAL PROCUREMENT AUCTIONS—EVIDENCE FROM PROCUREMENT OF PUBLIC CLEANING CONTRACTS
Author(s) -
LUNANDER ANDERS,
LUNDBERG SOFIA
Publication year - 2013
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.2012.00317.x
Subject(s) - procurement , combinatorial auction , common value auction , business , order (exchange) , microeconomics , industrial organization , economics , marketing , finance
Combinatorial procurement auctions enable suppliers to pass their potential cost synergies on to the procuring entity and may therefore lead to lower costs and enhance efficiency. However, bidders might find it profitable to inflate their stand‐alone bids in order to favor their package bids. Using data from standard and combinatorial procurement auctions, we find that bids on individual contracts in simultaneous standard auctions without the option to submit package bids are significantly lower than the corresponding stand‐alone bids in combinatorial auctions. Further, no significant difference in procurer's cost as explained by auction format is found . ( JEL D44, H57, L15)