On the Competitive Effects of Screening in Procurement

G. Seres, Adam Pigon*

*Corresponding author for this work

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Abstract

Procuring authorities frequently use screening in order to mitigate risky bids. This study estimates the effect of bid screening and litigation on entry and bidding using a unique data set on highway construction procurement auctions in Poland. The market exhibits a screening method that ex post selects eligible offers. We demonstrate with an empirical model that this method disproportionately affects small firms and creates a barrier to entry. Our results suggest that screening increases bids by two channels. First, it directly inflates bids as well as decreasing entry. Second, in a competitive market, lower entry also inflates bids and prices.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages45
Volume2019-019
Publication statusPublished - 14 May 2019

Publication series

NameCentER Discussion Paper
Volume2019-019

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Keywords

  • procurement
  • auctions
  • market design
  • litigation

Cite this

Seres, G., & Pigon, A. (2019). On the Competitive Effects of Screening in Procurement. (CentER Discussion Paper; Vol. 2019-019). Tilburg: CentER, Center for Economic Research.