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| Albano, Gian Luigi; Cesi, Berardino. |
| When procurement contracts are awarded through competitive tendering participating firms commit ex ante to fulfil a set of contractual duties. However, selected contractors may find profitable to renege ex post on their promises by opportunistically delivering lower quality standards. In order to deter ex post moral hazard, buyers may use different strategies depending on the extent to which quality dimensions are contractible, that is, verifiable by contracting parties and by courts. We consider a stylized repeated procurement framework in which a buyer awards a contract over time to two firms with different efficiency levels. If the contractor does not deliver the agreed level of performance the buyer may handicap the same firm in future competitive... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Repeated Procurement; Handicapping; Relational Contracts; Stick and Carrot Strategy; Political Economy; C73; D82; D44; H57; K12; L14. |
| Ano: 2008 |
URL: http://purl.umn.edu/6370 |
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| Albano, Gian Luigi; Dini, Federico; Zampino, Roberto. |
| Competitive bidding (as auctions) is commonly used to procure goods and services. Public buyers are often mandated by law to adopt competitive procedures to ensure transparency and promote full competition. Recent theoretical literature, however, suggests that open competition can perform poorly in allocating complex projects. In exploring the determinants of suppliers’ bidding behavior in procurement auctions for complex IT services, we find results that are consistent with theory. We find that price and quality do not exhibit the classical tradeoff one would expect: quite surprisingly, high quality is associated to low prices. Furthermore, while quality is mainly driven by suppliers’ experience, price is affected more by the scoring rule and by the level... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Procurement Auctions; Scoring Rules; IT Contracts; Price/Quality Ratio; Demand and Price Analysis; D44; D86; H51; H57. |
| Ano: 2008 |
URL: http://purl.umn.edu/46547 |
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