Competition in the economic crisis: Analysis of procurement auctions

Gugler, Klaus and Weichselbaumer, Michael and Zulehner, Christine (2015) Competition in the economic crisis: Analysis of procurement auctions. European Economic Review, 73. pp. 35-57. ISSN 00142921

Available under License Creative Commons Attribution 3.0 Austria (CC BY 3.0 AT).

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We study the effects of the recent economic crisis on firms' bidding behavior and markups in sealed bid auctions. Using data from Austrian construction procurements, we estimate bidders' construction costs within a private value auction model. We find that markups of all bids submitted decrease by 1.5 percentage points in the recent economic crisis, markups of winning bids decrease by 3.3 percentage points. We also find that without the government stimulus package this decrease would have been larger. These two pieces of evidence point to pro-cyclical markups. (authors' abstract)

Item Type: Article
Additional Information: Open Access funded by Austrian Science Fund (FWF).
Keywords: Construction procurement / First-price auctions / Private values / Economic crisis / Government stimulus
Classification Codes: JEL D44, L10, L13
Divisions: Departments > Volkswirtschaft > Quantitative Volkswirtschaftslehre
Forschungsinstitute > Regulierungsökonomie
Version of the Document: Published
Variance from Published Version: None
Depositing User: Elena Simukovic
Date Deposited: 04 May 2015 12:59
Last Modified: 24 Oct 2016 19:05
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