The great school milk conspiracies of the 1980s

Various dairy companies' allocation of school milk contracts using signalling, sham bids to honor incumbency and other devices are examined to determine whether bidding was collusive or pure oligopolistic interdependent behavior following noncooperative game theory. The schemes used to allocate contracts were found to be efficient methods for reaching agreements. Since pure interdependent (noncoorperative) behavior requires rivals to corelate signals, coordinate expectations, and resolve timing-uncertainty problems within sealed-bidding constraints, detailed analysis of the economic evidence of bidding practices requires rejection of a Nash equilibrium explanation for the behavior.     

Bid-Rigging in Auctions for Korean Public-Works Contracts and Potential Damage

This research is an empirical study to find solid statistical evidence of collusion inauction for construction contracts and to gauge the possible effects of bid-rigging onauction prices in Korea. Using limited information contained in sketch bid data, weshow that local construction firms enjoy statistically significant incumbency premiumsin their incumbent sites. Thus, it is inferred that contractors engage in complementarybidding, in which all bidders, except one, submit high bids so as to lose. The statisticalevidence of the incumbency effect is also confirmed in long-running civil engineeringconstruction contracts, which are carried out over several years. Utilizing the transitionfrom a cooperative to non-cooperative regime, we also estimate the potential damage ofstructural bid rigging in public-works contracts by year, contractor and construction type. The estimated overcharge ratio based on a forecasting approach is 15.5% of the total expenditures from January 1995 to June 1998. We also present potential damage estimates by the firm. The estimated overcharge by contractor offers a guideline for the proper allocation of the total overcharges to construction contractors in case contractors are charged with bid-rigging and found guilty.     

Network structure effects on incumbency advantage

Research summary: The literature on network effects has implicitly assumed that an increase in the size of the installed base magnifies network effects, which is a source of incumbency advantage. We argue that the overemphasis on this relationship has resulted in controversy and confusion in the literature, where the role of social networks remains largely unaddressed. By developing computational models of network effects with various network structures, we show that social distance in a customer network plays a moderating role that strengthens or weakens the relationship between the installed base and network effects, which in turn, affects the durability of incumbency advantage. When the average social distance between members in a customer network is large, the incumbency advantage will not be amplified, and an entrant with an incompatible product or service may find ways into the market. On the other hand, when the average social distance is small, early entry with a growing installed base will magnify incumbency advantage. Managerial summary: In evaluating the strength of incumbency advantage or determining the price of an early mover, the size of the installed base has been widely used. We find that it is not a sufficient statistic, and confusion and error appear to result from assuming that it is. Our study suggests that degrees of separation, a measure of social distance in a network, can provide managers with an additional yardstick to sharpen their evaluation. When customer networks are characterized by fewer degrees of separation, the conventional use of the installed base as a metric may be reasonable. On the other hand, when customer networks are characterized by larger degrees of separation, the conventional use may potentially mislead managers in their decision‐making. Thinking about the roots of user benefits (e.g., access to a few significant others vs. hubs) may be a reasonable starting point for assessing degrees of separation in a customer network. Copyright © 2015 John Wiley & Sons, Ltd.     

School quality as a catalyst for bidding wars and new housing development

We provide new evidence of the demand for better schools as manifested in bidding wars and changes to the built environment. Using repeat sales before and after a redistricting, we exploit shocks to school quality arising from the continuous, unexpected redistricting of school attendance boundaries in Atlanta. We find that houses redistricted to higher (lower) quality schools are more (less) likely to be involved in a market-driven bidding war. Similarly, undeveloped, redistricted parcels that receive a positive (negative) school quality shock are more (less) likely to be developed. School quality shocks also have a causal effect on house prices and time-on-market.     

Auctions with resale when private values are uncertain: Evidence from the lab and field

Auction theory represents one of the richest areas of research in economics over the past three decades. Yet, whether, and to what extent, the introduction of secondary resale markets influences bidding behavior in sealed-bid first-price auctions remains under researched. This study begins by examining field data from a unique data set that includes nearly 3000 auctions (over 10,000 individual bids) for cutting rights of standing timber in British Columbia from 1996 to 2000. In comparing bidding patterns across agents who are likely to have resale opportunities with those who likely do not, we find evidence that is consistent with theory. Critical evaluation of the reduced-form bidding model, however, reveals that sharp tests of the theoretical predictions are not possible because several other differences may exist across these bidder types. We therefore use a laboratory experiment to examine if the resale opportunity by itself can have the predicted theoretical effect. We find that while it does have the predicted effect, a theoretical model based on risk-averse bidders explains the overall data patterns more accurately than a model based on risk-neutral bidders. Beyond testing theory, the paper highlights the inferential power of combining naturally occurring data with laboratory data.     

Balancing Power Markets in Germany: Timing Matters

This paper analyzes timing issues on the German balancing power market. We focus the analysis on the length of the bidding period, i.e. the length of the time period a supplier has to provide balancing power capacities, and the question of how far before the beginning of a bidding period the auction should be carried out. We show that different load levels require different plants for the optimal provision of balancing power. In a longer bidding period, the power plants that have the lowest average cost in the bidding period are unlikely to be efficient in all hours of the bidding period. Hence, shortening bidding periods can increase efficiency. Furthermore, we show that an early commitment on a power plant’s mode of operation (when uncertainty about resulting spot prices is still relatively high) also reduces efficiency. This suggests that the auction should be held relatively close to the beginning of the bidding period. Furthermore, we discuss some advantages of a liquid real time market.     

Decoupling market incumbency from organizational prehistory: Locating the real sources of competitive advantage in R&D for radical innovation

The creative destruction literature has argued that differences in R&D performance of incumbent vs. entrant firms can be explained through organizational change theories about established vs. de novo firms. A disconnect exists between these theories and the available empirical evidence because often the best performing firms are established firms as well. I propose to resolve this disconnect by distinguishing between market incumbency (presence in a market prior to a discontinuity) and organizational prehistory (organizational experience prior to a transition, whether between technologies or between markets). Doing so allows me to contrast incumbent vs. entrant and de alio vs. de novo studies, and to suggest more robust future research designs. I illustrate my proposition using qualitative data from the anticancer and AIDS‐treatment drug markets. Copyright © 2012 John Wiley & Sons, Ltd.     

The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto,California with Four Nearby Prevailing Wage Municipalities

This sample of bids by union and nonunion contractors on and off municipal prevailing wage projects in the San Francisco Bay area of California provides the first empirical evidence examining the effects of prevailing wage regulations on contractor participation and bidding behavior. The data show that the presence of prevailing wage regulations does not decrease the number of bidders nor alter the bidding behavior of contractors relative to the engineer's estimate of the value of the project. Furthermore, in this heavily unionized area during an upswing in the business cycle, the presence of prevailing wage regulations did not discourage the participation of nonunion contractors nor reduce their chances of winning work.     

The competitive bidding process: Beyond probability models

In this article, the author reviews various approaches to competitive bidding. He then goes on to describe the results of a study of factors important to general construction contractors in developing a bidding strategy. These factors are synthesized into a general view of strategic bidding that emphasizes a wide range of information flows and describes the final bid outcome as a function of company objectives, costs, risk and desirability of the job.     

EPC项目投标报价方法及影响因素研究

我国EPC总承包商在投标报价时面临设计深度不足、施工过程不确定性大等风险,导致其投标报价的难度相较于传统承发包模式更大,为保证总承包企业在EPC项目中能够获得最佳的收益,本文在EPC总承包项目投标报价特征的基础上,分析投标报价的内容及其计算方法,并对EPC总承包项目投标报价的影响因素进行识别与阐述,最后辅以工程实例进行说明。研究结论为总承包企业在EPC项目中的投标报价起借鉴作用,进而促进我国EPC总承包模式的健康发展。     

论基于博弈论的投标报价建模方法

随着我国经济建设的发展,建筑市场的规范、有序化管理已经逐步形成,其中招投标制度在工程承发包交易行为公开、公平、提高工程质量、发挥投资效益、防止腐败和不正当竞争等方面均起到了很好的促进作用。根据现行的主要招投标评标方法,分析基于博弈论建立与之相适应的投标博弈模型的方法,为施工企业投标的科学决策提供借鉴。     

Last-Minute Bidding in Sequential Auctions with Unobserved, Stochastic Entry

Using a dataset of calculator auctions on eBay, we first show that last-minute bidding is not merely the result of bidders’ going to the next-to-close auction. Instead, bidding is concentrated at the end of the period in which the auction is the next to close, suggesting the existence of strategic last-minute bidding. Then, we model repeated, ascending price auctions for homogeneous goods with unobserved, stochastic entry. We show that the dynamic game has a pure-strategy symmetric equilibrium in which entrants always reveal themselves by bidding in the auction in which they arrive, and bidding occurs at the last minute.     

Governance and game theory: When do franchise auctions induce firms to overbid?

The use of auctions as an instrument of public policy has been hailed as evidence of the utility and validity of game theory. In this paper, we focus on extreme cases – centrally, spectrum auctions in the UK and Germany in 2000 – to argue that the canonical game theoretic interpretations of firm behaviour in some (highly “successful”) auction outcomes are inadequate, that the economics of governance critique of franchise bidding can be extended to provide a better interpretation, and that under specified conditions, notably high uncertainty, policy-makers should design franchise auctions to avoid overbidding, rather than attend to the more conventional challenge of underbidding.     

Mergers,acquisitions and control of telecommunications firms in Europe

New evidence is presented about 12 large acquisitions by telecommunications firms in Europe. The average effect on acquirers’ shareholder value is not significantly different from zero, which confirms a paradox found by previous studies: bidding firms’ shareholders do not benefit from takeovers. There is high dispersion in the results. This suggests that detailed studies may uncover important aspects of the constraints that exist in the corporate control market of telecommunications firms. A case study of the Spanish firm Telefonica suggests that corporate governance problems and political intervention are significant components of these “agency” constraints.     

关于经评审的最低投标价法在军队工程推广应用的探讨

为了使军队工程招投标适应我国招投标的发展趋势,提高我军工程建设的投资效益,探讨经评审的最低投标价法在军队工程中的推广应用具有重大意义。在对军队工程招投标存在问题分析的基础上,探讨了这种评标方法应用的必要性和可行性。提出了具体的做法和相关的建议,即评标过程的一体化管理思想和10个关键环节的管理。分析了这种评标方法难以推广的原因和军队应采取的对策。通过分析,认为在军队工程中推广使用经评审的最低投标价法的条件已经成熟,这种方法将会在军队工程建设中发挥越来越重要的作用。     

Great School Milk Conspiracies Revisited: Rejoinder

A re-examination and analysis ofdata in court records covering sealed-biddingpractices, market shares, incumbency rates, andprofit margins of two dairies charged with bid-riggingdisclose that Scott's analysis is flawed in severalimportant respects: reliance on selective bid data,omission of relevant bid data, and errors in reportedbids. Accordingly, Scott's hypothesis (that twodairies may have been engaged in tacit collusioninstead of overt collusion) was found to be basedlargely on conjectures, not hard data, and thus shouldbe rejected.     

Price Adjustment Policies in Procurement Contracting: An Analysis of Bidding Behavior

The fluctuations in fuel prices over the past decade led a number of government agencies to introduce price adjustment clauses in procurement contracting. Those clauses were primarily designed to reduce contractors’ uncertainty without considering the impact of such initiatives on bidding and the budget. We analyze a newly constructed, detailed panel of observations on bids for construction contracts and compare bidding behavior across periods and projects, and across items within projects. Estimates from a difference‐in‐differences approach, indicate that bidding becomes more aggressive and less dispersed after the implementation of this policy. The difference is more pronounced when we consider itemized bids than overall project bids. Alternative techniques of regression discontinuity and nonparametric estimation are applied and yield consistent results.     

Effects of Minimum Bid Increments in Internet Auctions: Evidence from a Field Experiment

I study the role of minimum bid increments (MBI) in internet auctions using natural field experiment data from a Finnish online auction site Huuto.net. Internet auctions are typically viewed as second‐price, implying truthful bidding. However, due to the presence of the MBI, equilibrium bidding behavior involves bid shading. I sell otherwise identical gift cards while varying the MBI and test between truthful bidding and bid shading. Truthful bidding is rejected. Consistently with equilibrium behavior, bid shading increases as the MBI increases. This implies that real‐world bidders are capable of reacting rationally even to seemingly small variations in their strategic environment.     

The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs

We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts that are known to have primarily private costs. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique that was proposed by Racine and Li (J Econom 119(1):99–130, 2004) we find that bidding is more aggressive in a sequential multi-round setting than in a simultaneous single-round format. We explore potential causes for the bidding difference across formats that are related to synergies and the level of bidder participation.     

经济适用房建设招标机制的比较分析

在经济适用房项目开发建设中充分利用市场机制尤其是招标机制,有利于提高项目的开发建设效率。对带有转移支付招标机制和最高限价招标机制分析表明,不同的招标机制在降低开发成本、增加供给量、揭示开发企业的实际成本和提高社会福利水平等方面,都具有不同的影响。