Auctions vs negotiations: a study of price differentials

Egil Kjerstad

Health Economics, 2005, vol. 14, issue 12, 1239-1251

Abstract: Recent contributions in auction and bargaining theory suggest that a procurer should place more faith in the power of competition among alternative suppliers than in his or her own negotiating skill. Based on data from 216 contracts between procurers and suppliers of medical and surgical articles, we test whether auctions and bargaining result in significantly different prices. The main results are that auctions give ‘thicker’ markets compared with negotiations, as expected, but that auctions do not result in significantly lower prices compared with negotiations. Copyright © 2005 John Wiley & Sons, Ltd.

Date: 2005
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https://doi.org/10.1002/hec.1004

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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:14:y:2005:i:12:p:1239-1251

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