Competition in the economic crisis: Analysis of procurement auctions

Klaus Gugler (), Michael Weichselbaumer and Christine Zulehner

European Economic Review, 2015, vol. 73, issue C, 35-57

Abstract: We study the effects of the recent economic crisis on firms׳ bidding behavior and markups in sealed bid auctions. Using data from Austrian construction procurements, we estimate bidders׳ construction costs within a private value auction model. We find that markups of all bids submitted decrease by 1.5 percentage points in the recent economic crisis, markups of winning bids decrease by 3.3 percentage points. We also find that without the government stimulus package this decrease would have been larger. These two pieces of evidence point to pro-cyclical markups.

Keywords: Construction procurement; First-price auctions; Private values; Economic crisis; Government stimulus (search for similar items in EconPapers)
JEL-codes: D44 L10 L13 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:73:y:2015:i:c:p:35-57

DOI: 10.1016/j.euroecorev.2014.10.007

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