An experimental study of bidding behavior in procurement auctions with subcontract bids: Profits, efficiency, and policy implications

Naoki Watanabe, Jun Nakabayashi

研究成果: Conference contribution

抄録

In order to lower the estimates of the total project costs, prime contractors often solicit bids from subcontractors which can complete their works with lower costs than they do by themselves, prior to submitting their own bids in procurement auctions. This paper presents a simple model of such two-stage auctions and shows some observations in a laboratory experiment conducted to examine theoretical predictions. Our main observations are as follows. (1) Subcontractors bid more aggressively (i.e., they lower their bids) in the first-price subcontract auctions, as compared to the case where there is no second-stage competition among prime contractors. (2) Second-price subcontract auctions render higher profits to prime contractors than first-price auctions. (3) First-price subcontract auctions more likely achieve ex post efficient allocations of a subcontract work than second-price auctions. The policy implications are also discussed.

元の言語English
ホスト出版物のタイトルSICE 2011 - SICE Annual Conference 2011, Final Program and Abstracts
ページ1202-1207
ページ数6
出版物ステータスPublished - 2011
外部発表Yes
イベント50th Annual Conference on Society of Instrument and Control Engineers, SICE 2011 - Tokyo, Japan
継続期間: 2011 9 132011 9 18

Other

Other50th Annual Conference on Society of Instrument and Control Engineers, SICE 2011
Japan
Tokyo
期間11/9/1311/9/18

Fingerprint

Contractors
Profitability
Costs
Experiments

ASJC Scopus subject areas

  • Electrical and Electronic Engineering
  • Control and Systems Engineering
  • Computer Science Applications

これを引用

Watanabe, N., & Nakabayashi, J. (2011). An experimental study of bidding behavior in procurement auctions with subcontract bids: Profits, efficiency, and policy implications. : SICE 2011 - SICE Annual Conference 2011, Final Program and Abstracts (pp. 1202-1207). [6060516]

An experimental study of bidding behavior in procurement auctions with subcontract bids : Profits, efficiency, and policy implications. / Watanabe, Naoki; Nakabayashi, Jun.

SICE 2011 - SICE Annual Conference 2011, Final Program and Abstracts. 2011. p. 1202-1207 6060516.

研究成果: Conference contribution

Watanabe, N & Nakabayashi, J 2011, An experimental study of bidding behavior in procurement auctions with subcontract bids: Profits, efficiency, and policy implications. : SICE 2011 - SICE Annual Conference 2011, Final Program and Abstracts., 6060516, pp. 1202-1207, 50th Annual Conference on Society of Instrument and Control Engineers, SICE 2011, Tokyo, Japan, 11/9/13.
Watanabe N, Nakabayashi J. An experimental study of bidding behavior in procurement auctions with subcontract bids: Profits, efficiency, and policy implications. : SICE 2011 - SICE Annual Conference 2011, Final Program and Abstracts. 2011. p. 1202-1207. 6060516
Watanabe, Naoki ; Nakabayashi, Jun. / An experimental study of bidding behavior in procurement auctions with subcontract bids : Profits, efficiency, and policy implications. SICE 2011 - SICE Annual Conference 2011, Final Program and Abstracts. 2011. pp. 1202-1207
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