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Set-Asides in USDA Food Procurement Auctions

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  • Ni Yan
  • WenTing Tao

Abstract

We study the partial and full set-asides and their implication for changes in bidding behavior in first-price sealed-bid auctions in the context of United States Department of Agriculture (USDA) food procurement auctions. Using five years of bid data on different beef products, we implement weighted least squares regression models to show that partial set-aside predicts decreases in both offer prices and winning prices among large and small business bidders. Full set-aside predicts a small increase in offer prices and winning prices among small businesses. With these predictions, we infer that net profit of small businesses is unlikely to increase when set-asides are present.

Suggested Citation

  • Ni Yan & WenTing Tao, 2023. "Set-Asides in USDA Food Procurement Auctions," Papers 2302.05772, arXiv.org.
    • Handle: RePEc:arx:papers:2302.05772
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    References listed on IDEAS

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    1. James M. MacDonald & Charles R. Handy & Gerald E. Plato, 2002. "Competition and Prices in USDA Commodity Procurement," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 128-143, July.
    2. Susan Athey & Dominic Coey & Jonathan Levin, 2013. "Set-Asides and Subsidies in Auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 1-27, February.
    3. Nakabayashi, Jun, 2013. "Small business set-asides in procurement auctions: An empirical analysis," Journal of Public Economics, Elsevier, vol. 100(C), pages 28-44.
    4. James M. MacDonald & Charles R. Handy & Gerald E. Plato, 2002. "Competition and Prices in USDA Commodity Procurement," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 128-143, July.
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