Bid Shopping in Procurement Auctions with Subcontracting

• 成果类型: Article; Early Access
• 署名作者: Deneckere, Raymond; Quint, Daniel
• 署名单位: University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdaf007
• 发表日期: 2025
• 关键词: Public procurement; Strategic stability; entry; incentives; single

摘要

We analyse the equilibrium effects of bid shopping-a contractor soliciting a subcontractor bid for part of a project prior to a procurement auction, then showing that bid to a competing subcontractor in an attempt to secure a lower price. Such conduct is widely criticized as unethical by professional organizations and has been the target of legislation at both the federal and state level but is widespread in procurement auctions in many places. We find that in equilibrium, a winning contractor's practice of shopping her subcontractor's bid to other subcontractors who have already submitted bids is welfare-decreasing, while shopping bids to new subcontractors who have not yet bid can be welfare-increasing, particularly when subcontractors' bid preparation costs are sufficiently high.