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How to Achieve Efficiency in Public Procurement Auctions

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  • Bedri Kamil Onur Tas

    (TOBB ETU, Department of Economics)

Abstract

This paper empirically investigates the optimal number of bidders to achieve the lowest procurement prices in public procurement auctions. We use a unique data set provided by the Public Procurement Authority of Turkey that covers all government procurement auctions for the years 2004-2010 (472,560 auctions). We conclude that there is an optimal number of bidders and this number varies for different types of products. These results indicate that auctioneers should promote competition in public procurement. The optimal number of bidders can be used by the authorities as a focal point to analyze whether competitive efficiency is achieved in the public procurement auctions.

Suggested Citation

  • Bedri Kamil Onur Tas, 2015. "How to Achieve Efficiency in Public Procurement Auctions," Working Papers 919, Economic Research Forum, revised Jun 2015.
    • Handle: RePEc:erg:wpaper:919
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    References listed on IDEAS

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    1. De Silva, Dakshina G. & Jeitschko, Thomas D. & Kosmopoulou, Georgia, 2005. "Stochastic synergies in sequential auctions," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 183-201, April.
    2. Estache, Antonio & Iimi, Atsushi, 2008. "Procurement efficiency for infrastructure development and financial needs reassessed," Policy Research Working Paper Series 4662, The World Bank.
    3. İlke Onur & Rasim Özcan & Bedri Taş, 2012. "Public Procurement Auctions and Competition in Turkey," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(3), pages 207-223, May.
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    5. De Silva, Dakshina G. & Kosmopoulou, Georgia & Lamarche, Carlos, 2009. "The effect of information on the bidding and survival of entrants in procurement auctions," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 56-72, February.
    6. Atsushi Iimi, 2006. "Auction Reforms for Effective Official Development Assistance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(2), pages 109-128, March.
    7. Han Hong, 2000. "Increasing Competition and the Winner's Curse: Evidence from Procurement," Econometric Society World Congress 2000 Contributed Papers 1628, Econometric Society.
    8. Bajari, Patrick & Hortacsu, Ali, 2003. "The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-355, Summer.
    9. Fan, Cuihong & Wolfstetter, Elmar, 2008. "Procurement with costly bidding, optimal shortlisting, and rebates," Economics Letters, Elsevier, vol. 98(3), pages 327-334, March.
    10. Han Hong & Matthew Shum, 2002. "Increasing Competition and the Winner's Curse: Evidence from Procurement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 871-898.
    11. Atsushi Iimi, 2007. "Aid and competition in procurement auctions: a case of highway projects," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 997-1015.
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