Competition in the economic crisis: Analysis of procurement auctions

Klaus Gugler; Michael Weichselbaumer; Christine Zulehner

doi:10.1016/j.euroecorev.2014.10.007

Competition in the economic crisis: Analysis of procurement auctions

Klaus Gugler, Michael Weichselbaumer, Christine Zulehner

Publication: Scientific journal › Journal article › peer-review

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Abstract

We study the effects of the recent economic crisis on firms׳ bidding behavior and markups in sealed bid auctions. Using data from Austrian construction procurements, we estimate bidders׳ construction costs within a private value auction model. We find that markups of all bids submitted decrease by 1.5 percentage points in the recent economic crisis, markups of winning bids decrease by 3.3 percentage points. We also find that without the government stimulus package this decrease would have been larger. These two pieces of evidence point to pro-cyclical markups.

Original language	English
Pages (from-to)	35 - 57
Journal	European Economic Review
Volume	73
DOIs	https://doi.org/10.1016/j.euroecorev.2014.10.007
Publication status	Published - 2015

Austrian Classification of Fields of Science and Technology (ÖFOS)

502013 Industrial economics

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