Auctions with Endogenous Participation and Quality Thresholds : Evidence from ODA Infrastructure Procurement
Infrastructure projects are often technically complicated and highly customized. Therefore, procurement competition tends to be limited. Competition is the single most important factor toward auction efficiency and anti-corruption. However, the deg...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090304110004 http://hdl.handle.net/10986/4049 |
| Summary: | Infrastructure projects are often
technically complicated and highly customized. Therefore,
procurement competition tends to be limited. Competition is
the single most important factor toward auction efficiency
and anti-corruption. However, the degree of competition
realized is closely related to bidders' entry decision
and the auctioneer's decision on how to assess
technical attributes in the bid evaluation process. This
paper estimates the interactive effects among quality,
entry, and competition. With data on procurement auctions
for electricity projects in developing countries, it is
found that large electricity works are by nature costly and
can attract only a few participants. The limited competition
would raise government procurement costs. In addition, high
technical requirements are likely to be imposed for these
large-scale projects, which will in turn add extra costs for
the better quality of works and further limit bidder
participation. The evidence suggests that quality is of
particular importance in large infrastructure projects and
auctioneers cannot easily substitute price for quality. |
|---|