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A STUDY OF PARTICIPATION IN DYNAMIC AUCTIONS

A STUDY OF PARTICIPATION IN DYNAMIC AUCTIONS This article studies repeated entry and bidding decisions in construction procurement auctions. I find evidence in the data that suggests the presence of significant cost savings from entering contracts of the same type. I estimate a dynamic auction model to measure the gains to experience for bidders. I allow for endogenous entry, synergies in entry, and unobserved auction heterogeneity. I find that a bidder can halve entry costs by focusing on specific contract types. An auctioneer can increase competition by awarding contracts of the same type in sequence. As a result, procurement costs for each contract can be lowered by 7%, a saving of $110,000. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Economic Review Wiley

A STUDY OF PARTICIPATION IN DYNAMIC AUCTIONS

International Economic Review , Volume 55 (4) – Nov 1, 2014

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References (56)

Publisher
Wiley
Copyright
Copyright © 2014 by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
ISSN
0020-6598
eISSN
1468-2354
DOI
10.1111/iere.12085
Publisher site
See Article on Publisher Site

Abstract

This article studies repeated entry and bidding decisions in construction procurement auctions. I find evidence in the data that suggests the presence of significant cost savings from entering contracts of the same type. I estimate a dynamic auction model to measure the gains to experience for bidders. I allow for endogenous entry, synergies in entry, and unobserved auction heterogeneity. I find that a bidder can halve entry costs by focusing on specific contract types. An auctioneer can increase competition by awarding contracts of the same type in sequence. As a result, procurement costs for each contract can be lowered by 7%, a saving of $110,000.

Journal

International Economic ReviewWiley

Published: Nov 1, 2014

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