Design of public procurement auctions: evidence from cleaning contracts

Ari Hyytinen, Sofia Lundberg, Otto Toivanen

Research output: Contribution to journalArticleScientificpeer-review

4 Citations (Scopus)

Abstract

We analyze a regime change from beauty contests to first-price sealed-bid and scoring auctions, using Swedish data on public procurement of cleaning services. In beauty contests, the lowest bid often lost, leaving substantial money on the table. The procurement costs were similar before and after the regime change: (i) Entry strongly decreases the procurement cost but did not change. Entry would have decreased had the municipalities not adjusted the objects of auctions. (ii) Municipalities favored in-house suppliers in the old regime, leading to more aggressive bidding by others. With favoritism reduced, these changes balanced each other out.

Original languageEnglish
Peer-reviewed scientific journalRAND Journal of Economics
Volume49
Issue number2
Pages (from-to)398-426
Number of pages29
ISSN0741-6261
DOIs
Publication statusPublished - 02.05.2018
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics

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