Past performance and entry in procurement: An experimental investigation

Jeffrey Butler, Enrica Carbone, Pierluigi Conzo and Giancarlo Spagnolo

Journal of Economic Behavior & Organization, 2020, vol. 173, issue C, 179-195

Abstract: There is widespread concern that incentive mechanisms based on past performance may hinder entry in procurement markets. We report results from a laboratory experiment assessing this concern. Within a simple dynamic procurement game where suppliers compete on price and quality we study how an incentive mechanism based on past performance affects outcomes and entry rates. Results indicate that some past-performance based mechanisms indeed hinder entry, but when appropriately designed may significantly increase both entry and quality provision without increasing costs to the procurer.

Keywords: Bid subsidies; Entry; Past performance; Procurement; Quality; Supplier selection; Vendor rating (search for similar items in EconPapers)
JEL-codes: H57 L14 L15 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Reputation and Entry in Procurement (2013)
Working Paper: Reputation and Entry (2013)
Working Paper: Reputation and Entry (2012)
Working Paper: Reputation and Entry (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:173:y:2020:i:c:p:179-195

DOI: 10.1016/j.jebo.2020.02.019

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