Joint bidding and horizontal subcontracting

Jan Bouckaert*, Geert Van Moer

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.
Original languageEnglish
Article number102727
Peer-reviewed scientific journalInternational Journal of Industrial Organization
Volume76
Number of pages41
ISSN0167-7187
DOIs
Publication statusPublished - 10.03.2021
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics
  • Joint bidding
  • Horizontal subcontracting
  • Buyer power

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics

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