OPTIMAL COST OVERRUNS: PROCUREMENT AUCTIONS WITH RENEGOTIATION

• 成果类型: Article
• 署名作者: Herweg, Fabian; Schwarz, Marco A.
• 署名单位: University of Bayreuth; Leibniz Association; Ifo Institut; Centre for Economic Policy Research - UK; University of Innsbruck
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12327
• 发表日期: 2018
• 页码: 1995-2021
• 关键词: EMPIRICAL-ANALYSIS; incomplete contracts; COMPETITION; DESIGN; NEGOTIATIONS; mechanism; price; bids

摘要

Cost overrun is ubiquitous in public procurement. We argue that this can be the result of a constrained optimal award procedure: The procurer awards the contract via a price-only auction and cannot commit not to renegotiate. If cost differences are more pronounced for a fancy than a standard design, it is optimal to fix the standard design ex ante. If renegotiation takes place and the fancy design has higher production costs or the contractor's bargaining position is strong, the final price exceeds the initial price. Moreover, the procurer cannot benefit from using a scoring auction.