Resident Bid Preference, Affiliation, and Procurement Competition: Evidence from New Mexico

Rosa, Benjamin (2016): Resident Bid Preference, Affiliation, and Procurement Competition: Evidence from New Mexico.

Abstract

In public procurement auctions, governments routinely offer preferences to qualified firms in the form of bid discounts. Previous studies on bid discounts do not account for affiliation -- a form of cost dependence between bidders that is likely to occur in a public procurement setting. Utilizing data from the New Mexico Department of Transportation's Resident Preference Program, this paper uses an empirical model of firm bidding and entry behavior to investigate the effect of affiliation on auctions with bid discounting. I find evidence that firms have affiliated project-completion costs and show how this type of affiliation changes preference auction outcomes.

• Item Type: MPRA Paper
• Language: English
• Keywords: Affiliation, procurement auctions, bid preferences
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H5 - National Government Expenditures and Related Policies > H57 - Procurement; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H76 - State and Local Government: Other Expenditure Categories; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R42 - Government and Private Investment Analysis ; Road Maintenance ; Transportation Planning

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