Bidders’ Entry and Auctioneer’s Rejection : Applying a Double Selection Model to Road Procurement Auctions
Limited competition has been a serious concern in infrastructure procurement. Importantly, however, there are normally a number of potential bidders initially showing interest in proposed projects. This paper focuses on tackling the question why th...
| 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_20090304112718 http://hdl.handle.net/10986/4051 |
| Summary: | Limited competition has been a serious
concern in infrastructure procurement. Importantly, however,
there are normally a number of potential bidders initially
showing interest in proposed projects. This paper focuses on
tackling the question why these initially interested bidders
fade out. An empirical problem is that no bids of fading-out
firms are observable. They could decide not to enter the
process at the beginning of the tendering or may be
technically disqualified at any point in the selection
process. This paper applies the double selection model to
procurement data from road development projects in
developing countries and examines why competition ends up
restricted. It shows that bidders are self-selective and
auctioneers also tend to limit participation depending on
the size of contracts. Therefore, limited competition would
likely lead to high infrastructure procurement costs. |
|---|