Renegotiation and discrimination in symmetric procurement auctions
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- dc.contributor.author Arozamena, Leandro
- dc.contributor.author Ganuza, Juan José
- dc.contributor.author Weinschelbaum, Federico
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:10:10Z
- dc.date.available 2024-11-14T10:10:10Z
- dc.date.issued 2021-07-01
- dc.date.modified 2024-11-14T10:08:10Z
- dc.description.abstract In order to make competition open, fair and transparent, procurement regulations often require equal treatment for all bidders. This paper shows how a favorite supplier can be treated preferentially (opening the door to home bias and corruption) even when explicit discrimination is not allowed. We analyze a procurement setting in which the optimal design of the project to be contracted is unknown. The sponsor has to invest in specifying the project. The larger the investment, the higher the probability that the initial design is optimal. When it is not, a bargaining process between the winning firm and the sponsor takes place. Profits from bargaining are larger for the favorite supplier than for its rivals. Given this comparative advantage, the favored firm bids more aggressively and then, it wins more often than standard firms. Finally, we show that the sponsor invests less in specifying the initial design, when favoritism is stronger. Underinvestment in design specification is a tool for providing a comparative advantage to the favored firm.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1790
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68670
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1790
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword auctions
- dc.subject.keyword favoritism
- dc.subject.keyword auction design
- dc.subject.keyword renegotiation
- dc.subject.keyword corruption
- dc.subject.keyword Behavioral and Experimental Economics
- dc.title Renegotiation and discrimination in symmetric procurement auctions
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper