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Tendering theory revisited

Author

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  • Goran Runeson
  • Martin Skitmore

Abstract

This paper discusses the content, origin and development of tendering theory as a theory of price determination. It demonstrates how tendering theory determines prices and how it is different from game and decision theories, and that in the tendering process, with non-cooperative, simultaneous, single sealed bids with individual private valuations, extensive public information, a large number of bidders and a long sequence of tendering occasions, there develops a competitive equilibrium. The development of a competitive equilibrium means that the concept of the tender as the sum of a valuation and a strategy, which is at the core of tendering theory, cannot be supported, and that there are serious empirical, theoretical and methodological inconsistencies in the theory.

Suggested Citation

  • Goran Runeson & Martin Skitmore, 1999. "Tendering theory revisited," Construction Management and Economics, Taylor & Francis Journals, vol. 17(3), pages 285-296.
    • Handle: RePEc:taf:conmgt:v:17:y:1999:i:3:p:285-296
    DOI: 10.1080/014461999371493
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    Citations

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    Cited by:

    1. Mohammed Fadhil Dulaimi & Hon Guo Shan, 2002. "The factors influencing bid mark-up decisions of large- and medium-size contractors in Singapore," Construction Management and Economics, Taylor & Francis Journals, vol. 20(7), pages 601-610.
    2. Martin Skitmore & Goran Runeson, 2006. "Bidding models: testing the stationarity assumption," Construction Management and Economics, Taylor & Francis Journals, vol. 24(8), pages 791-803.
    3. Qiao, Yu & Labi, Samuel & Fricker, Jon D., 2021. "Does highway project bundling policy affect bidding competition? Insights from a mixed ordinal logistic model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 145(C), pages 228-242.
    4. Martin Skitmore & Goran Runeson & Xinling Chang, 2006. "Construction price formation: full-cost pricing or neoclassical microeconomic theory?," Construction Management and Economics, Taylor & Francis Journals, vol. 24(7), pages 773-783.

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