On the Competitive Effects of Screening in Procurement

On the Competitive Effects of Screening in Procurement

By:	Seres, G. (Tilburg University, TILEC); Pigon, Adam
Abstract:	Procuring authorities frequently use screening in order to mitigate risky bids. This study estimates the effect of bid screening and litigation on entry and bidding using a unique data set on highway construction procurement auctions in Poland. The market exhibits a screening method that ex post selects eligible offers. We demonstrate with an empirical model that this method disproportionately affects small firms and creates a barrier to entry. Our results suggest that screening increases bids by two channels. First, it directly inflates bids as well as decreasing entry. Second, in a competitive market, lower entry also inflates bids and prices.
URL:	http://d.repec.org/n?u=RePEc:tiu:tiutil:78e45bf6-3a0a-46a0-9abd-78a8baa4e3ad&r=com