Cost Overrun and Auction Format in Public Works

Alessandro Bucciol, Ottorino Chillemi () and Giacomo Palazzi ()
Additional contact information
Ottorino Chillemi: University of Padova
Giacomo Palazzi: University of Padova

No 129, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: We provide an empirical investigation of cost overruns in small public procurement projects, using a panel dataset of auctions held in the Italian Veneto region between 2004 and 2006. We use this sample to study the effect on cost overruns of auction formats (average bid as opposed to first price rule) conditional on the entry mechanisms (free as opposed to limited access). It is commonly believed that cost overruns are lower under average bid auctions relative to first price auctions. We find support to this belief only when access to the auction is limited. We interpret this finding as evidence that winner's adverse selection is an important problem in auctions for small size public works, and the lack of a significant effect of the average bid format in free entry auctions may reflect collusion.

Keywords: cost overrun, average bid, first price; free entry; work delays. (search for similar items in EconPapers)
JEL-codes: D44 H57 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2011-03
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://economia.unipd.it/sites/economia.unipd.it/files/20110129.pdf (application/pdf)

Related works:
Working Paper: Cost Overrun and Auction Format in Public Works (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0129

Access Statistics for this paper

More papers in "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno" Contact information at EDIRC.
Bibliographic data for series maintained by Raffaele Dei Campielisi ().