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Bidders' Entry and Auctioneers' Rejection: Applying a Double Selection Model to Road Procurement Auctions

Antonio Estache and Atsushi Iimi ()

No 2009_008, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: Limited competition has been a serious concern in infrastructure procurement. Importantly, however, there are normally a number of potential bidders initially showing interest in proposed projects. This paper focuses on tackling the question why these initially interested bidders fade out. An empirical problem is that no bids of fading-out firms are observable. They could decide not to enter the process at the beginning of the tendering or may be technically disqualified at any point of the selection process. The paper applies the double selection model to procurement data from road development projects in developing countries and examines why competition ends up restricted. It shows that bidders are self-selective and auctioneers also tend to limit participation depending on the size of contracts. Then, limited competition would likely lead to high infrastructure procurement costs.

Keywords: Public procurement; auction theory; endogenous bidder entry; infrastructure development (search for similar items in EconPapers)
JEL-codes: D44 H54 H57 C21 D21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ppm
Date: 2009
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Related works:
Working Paper: Bidders' entry and auctioneer's rejection: Applying a double selection model to road procurement auctions (2011)
Working Paper: Bidders'entry and auctioneer's rejection: applying a double selection model to road procurement auctions (2009) Downloads
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