Bidders' entry and auctioneer's rejection: Applying a double selection model to road procurement auctions

Antonio Estache and Atsushi Iimi

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: Public procurement is a dynamic process involving vendors, contractors and procuring agencies. Even before submitting bids, competition among contractors may already have started. Given the nature of public work and expected strategies of rivals, some firms decide to enter the market, but others do not. Procurers can also enhance or limit the bidder participation through various ex ante qualification procedures for quality assurance purposes. Some applicants are qualified, but others are not. Thus, the selection process has two dimensions: bidders self-select, and an auctioneer may (dis)qualify some applicants. The paper explores this selection dynamics, using procurement data from road projects in developing countries. It shows that bidders are selecting themselves; low-cost firms are more prone to enter the market. But they are more likely to be rejected for technical reasons. Procurement design, such as contract size, and public governance are also found important determinants of the entry strategy of firms. © 2011 Universidad del CEMA.

Keywords: Auction theory; Endogenous bidder entry; Infrastructure development; Public procurement (search for similar items in EconPapers)
Date: 2011-11
Note: SCOPUS: ar.j
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Citations: View citations in EconPapers (5)

Published in: Journal of applied economics (2011) v.14 n° 2,p.199-223

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Related works:
Journal Article: Bidders' Entry and Auctioneer's Rejection: Applying a Double Selection Model to Road Procurement Auctions (2011)
Working Paper: Bidders' Entry and Auctioneers' Rejection: Applying a Double Selection Model to Road Procurement Auctions (2009)
Working Paper: Bidders'entry and auctioneer's rejection: applying a double selection model to road procurement auctions (2009)
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