Empirical analysis of unbalanced bidding on Swedish roads

Johan Nyström () and Daniel Wikström
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Johan Nyström: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Daniel Wikström: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden, https://www.du.se/en/about-du/personal-presentation/?userId=1998840258

No 2019:4, Working Papers from Swedish National Road & Transport Research Institute (VTI)

Abstract: Based on anecdotal evidence, claims are made that unbalanced bidding is a major problem in the construction industry. This concept refers to a sealed price auction setting with asymmetric information and unit prices, where information rents are extracted. Theoretical literature has shown that it is rational for an informed contractor to skew unit prices. However, empirical studies on the magnitude of the problem are lacking. As the first quantitative study based on European data, it is shown that unbalanced bidding exists, but in small magnitudes. The result is in line with earlier studies from the US.

Keywords: Unbalanced bidding; Asymmetric information; Information rent (search for similar items in EconPapers)
JEL-codes: D22 D82 D86 H57 L92 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019-08-23
New Economics Papers: this item is included in nep-com and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:vtiwps:2019_004

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