Joint bidding and horizontal subcontracting

Jan Bouckaert and Geert Van Moer

International Journal of Industrial Organization, 2021, vol. 76, issue C

Abstract: This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.

Keywords: Joint bidding; Horizontal subcontracting; Buyer power (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 L41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:76:y:2021:i:c:s0167718721000205

DOI: 10.1016/j.ijindorg.2021.102727

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