Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82677
Authors: 
Eklöf, Matias
Year of Publication: 
2003
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2003:12
Abstract: 
This paper considers the social costs implied by inefficient allocation of contracts in a first price, sealed bid procurement auction with asymmetric bidders. We adopt a constrained (piecewise linear) strategy equilibrium concept and estimate the structural parameters of the bidders’ distribution of costs. We estimate social costs defined as the predicted cost difference between the winning firm and the most efficient bidding firm. We also compare the expected procurement costs under two different auction formats. The data is collected from procurement auctions of road painting in Sweden during 1993-99. The results indicate that the social costs of inefficient contract allocation is about 1.7 per cent of total potential social cost and that an efficient second price auction would lower the expected procurement cost by 2.8 per cent.
Subjects: 
Procurement auctions
inefficiency
constrained strategy equilibrium
simulation
JEL: 
C15
D44
H57
Document Type: 
Working Paper

Files in This Item:
File
Size
400.99 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.