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

Rosa, Benjamin (2018): 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 discounting do not account for affiliation – a form of cost dependence between bidders that is likely to occur in a public procurement environment. Utilizing data from the New Mexico Department of Transportation's Resident Preference Program, I develop and estimate an empirical model of firm bidding and entry that allows for affiliation in firms' project costs. I find evidence of affiliation and show how it 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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