Competition for procurement shares

Competition for procurement shares

We propose a new procurement procedure which allocates shares of the total amount to be procured depending on the bids of suppliers. Among the properties of the mechanism are: (i) Bidders have an incentive to participate in the procurement procedure, as equilibrium payoffs are strictly positive. (ii) The mechanism allows to vary the extent to which affirmative action objectives, like promoting ...

Competition for Procurement Contracts with Service Guarantees

We consider a market with two suppliers and a set of buyers in search of procurement contracts with one of the suppliers. In particular, each buyer needs to process a certain volume of work, and each supplier’s ability to process the customers’ requests is constrained by a production capacity. The procurement contracts include guarantees that the products will be available when needed, and the ...

Procurement Competition at Work: The Manufacturer's Experience

Corruption and competition in procurement auctions

We investigate the effect of corruption on competition in procurement. Our assumption is that the bureaucrat (i.e., the agent that administers the market), if corrupt, may provide an opportunity for bid readjusments in exchange for a bribe. As firms expect to be paying a bribe, a mechanical effect of corruption is to increase the contract price by an amount corresponding to the anticipated brib...

Competition and Interdependent Costs in Highway Procurement∗

I investigate the effect of competition on bidder behavior and procurement cost using highway auction data from Michigan. While a bidder’s distance to a project location is important in explaining participation and bid levels, there is no evidence of more aggressive bidding when competitors are located close to the project. This pattern is at odds with theoretical predictions based on first-pri...