Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 825: Do Combinatorial Procurement Auctions Lower Cost? - An Empirical Analysis of Public Procurement of Multiple Contracts
Anders Lunander () and Sofia Lundberg ()
Additional contact information
Anders Lunander: Swedish Business School, Postal: Department of Economics, Örebro University, SE - 702 82 Örebro, Sweden
Sofia Lundberg: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Abstract: Combinatorial procurement auctions enable suppliers to pass their potential cost synergies on to the procuring entity and may therefore lead to lower costs and enhance efficiency. However, bidders might find it profitable to inflate their stand-alone bids in order to favour their package bids. Using data from standard and combinatorial procurement auctions, we find that bids on individual contracts in simultaneous standard auctions without the option to submit package bids are significantly lower than the corresponding stand-alone bids in combinatorial auctions. Further, no significant difference in procurer’s cost as explained by auction format is found.
Keywords: Combinatorial procurement auctions; Contract bidding
22 pages, April 20, 2011
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