The effect of information on the bidding and survival of entrants in procurement auctions

• 成果类型: Article
• 署名作者: De Silva, Dakshina G.; Kosmopoulou, Georgia; Lamarche, Carlos
• 署名单位: Texas Tech University System; Texas Tech University; University of Oklahoma System; University of Oklahoma - Norman
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2008.05.001
• 发表日期: 2009
• 页码: 56-72
• 关键词: Government procurement; auctions; entry; survival analysis

摘要

In government procurement auctions of construction contracts, entrants are typically less informed and bid more aggressively than incumbent firms. This bidding behavior makes them more susceptible to losses affecting their prospect of survival. In April of 2000, the Oklahoma Department of Transportation started releasing the internal cost estimates to complete highway construction projects. Using newly developed quantile regression approaches, this paper examines the impact of the policy change on aggressive entrants. First, we find that the information release eliminates the bidding differential between entrants and incumbents attributed to informational asymmetries. Second, we argue that the policy change affects the prospects of survival of entrants in the market. We find that those who used to exit the market relatively soon are now staying 37% longer, while at the median level bidding duration increased by roughly 68%. The policy has the potential to encourage entry in government procurement auctions and thus increase competition. (c) 2008 Elsevier B.V. All rights reserved.