On the Competitive Effects of Screening in Procurement
CentER Discussion Paper No. 2019-019
45 Pages Posted: 29 May 2019
Date Written: May 14, 2019
Procuring authorities frequently use screening in order to mitigate risky bids. This study estimates the eﬀect of bid screening and litigation on entry and bidding using a unique data set on highway construction procurement auctions in Poland. The market exhibits a screening method that ex post selects eligible oﬀers. We demonstrate with an empirical model that this method disproportionately aﬀects small ﬁrms and creates a barrier to entry. Our results suggest that screening increases bids by two channels. First, it directly inﬂates bids as well as decreasing entry. Second, in a competitive market, lower entry also inﬂates bids and prices.
Keywords: Procurement, Auctions, Market Design, Litigation
JEL Classification: H57, D44, D47, L5
Suggested Citation: Suggested Citation