Auctions vs. Bargaining: An Empirical Analysis of Medical Device Procurement

18 Pages Posted: 26 Jun 2000

See all articles by Andrea Bonaccorsi

Andrea Bonaccorsi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Thomas P. Lyon

University of Michigan, Stephen M. Ross School of Business

Fabio Pammolli

University of Siena - Department of Economics

Giuseppe Turchetti

Scuola Superiore Sant'Anna

Date Written: January 19, 2000

Abstract

We test recent theory on the benefits of auctions and bargaining as alternative procurement mechanisms using data on the procurement of medical devices by Italian hospitals. Theory suggests that auctions perform well when cost control is the key concern, but are less effective at producing the optimal mix of quality and price for complex products where quality is difficult to verify. Consistent with the theory, we find that auctions are used more often when the influence of financial staff relative to medical staff is high, when the marginal cost of increasing product quality is high, and when the marginal value of increasing quality is low.

JEL Classification: D44, I11, L14, L31

Suggested Citation

Bonaccorsi, Andrea and Lyon, Thomas P. and Pammolli, Fabio and Turchetti, Giuseppe, Auctions vs. Bargaining: An Empirical Analysis of Medical Device Procurement (January 19, 2000). Available at SSRN: https://ssrn.com/abstract=224263 or http://dx.doi.org/10.2139/ssrn.224263

Andrea Bonaccorsi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy
+39 05 088 3323 (Phone)
+39 05 088 3344 (Fax)

Thomas P. Lyon (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-615-1639 (Phone)

Fabio Pammolli

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
Siena, I-53100
Italy

Giuseppe Turchetti

Scuola Superiore Sant'Anna ( email )

Biblioteca Scuola Superiore Sant'Anna
I-56127 Pisa, 56100
Italy

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
522
Abstract Views
3,694
Rank
98,662
PlumX Metrics