Reputation and Entry in Procurement

Giancarlo Spagnolo, Jeffrey Butler, Pierluigi Conzo and Enrica Carbone ()

No 9651, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: There is widespread concern that favoring suppliers with good past performance, a standard practice in private procurement, may hinder entry by new firms in public procurement markets. In this paper we report results from a laboratory experiment exploring the relationship between reputation and entry in procurement. We implement a repeated procurement game with reputational incentives for quality and the possibility of entry. We allow also the entrant to start off with a positive reputational score. Our results suggest that while some past-performance based reputational mechanisms do reduce the frequency of entry, appropriately designed mechanisms can significantly increase it. Moreover, the reputational mechanism we investigate typically increases quality but not prices, suggesting that well designed mechanisms may generate very large gains for buyers and taxpayers.

Keywords: Bid preferences; Entry; Feedback mechanisms; Outsourcing; Past performance; Procurement; Quality assurance; Reputation; Vendor rating (search for similar items in EconPapers)
JEL-codes: H57 L14 L15 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-com, nep-cta, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Past performance and entry in procurement: An experimental investigation (2020)
Working Paper: Reputation and Entry (2013)
Working Paper: Reputation and Entry (2012)
Working Paper: Reputation and Entry (2012)
Working Paper: Reputation and Entry (2012)
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