Competition in the economic crisis: Analysis of procurement auctions

Klaus Gugler, Michael Weichselbaumer, Christine Zulehner

Publication: Scientific journalJournal articlepeer-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 languageEnglish
Pages (from-to)35 - 57
JournalEuropean Economic Review
Volume73
DOIs
Publication statusPublished - 2015

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502013 Industrial economics

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