Procurement with costly bidding, optimal shortlisting, and rebates

Cuihong Fan and Elmar Wolfstetter

Economics Letters, 2008, vol. 98, issue 3, 327-334

Abstract: We consider procurement auctions when bid preparation is costly and shortlisting is adopted. We find that a policy of reimbursing bidding costs is profitable if and only if performance and bidding costs are negatively correlated. Negative rebates dominate positive rebates.

Date: 2008
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