Seminar – Evaluation of Bidding Groups in First Price Auctions

Christine Zulehner, Professor of Economics, University of Vienna

We analyse bidding groups that participate in procurement auctions and ask what would have happened in the absence of the joint bid in terms of number of bidders and outcome. This counterfactual is of utmost importance in competition policy determining the competitive effects of joint bidding. With data from the Austrian construction sector, we estimate models of first price sealed bid auctions with endogenous entry. Based on the estimated bidding distributions and bidders’ entry behaviour, we run counterfactual simulations. The auctioneer would not benefit from dissolving bidding groups, since, although participation decreases only slightly, winning bids would increase by about two per cent. When bidding groups are forbidden or only small firms are allowed to form bidding groups, then fewer large firms take part in public procurement auctions and other firms, less efficient firms, enter in the bidding process.

Speaker bio

Christine Zulehner is Professor of Economics at University of Vienna, visiting professor at Telecom Paris, and a research fellow at the Austrian Institute of Economic Research (WIFO). She received her PhD in Economics from Humboldt University Berlin. Prior to joining University of Vienna, she held positions at Goethe University Frankfurt and Johannes Kepler University Linz. Christine is interested industrial organisation, competition policy, labour economics and applied microeconomics. Her research has been published in international journals like the American Economic Journal: Microeconomics, International Journal of Industrial Organization, Journal of the European Economic Association, Journal of Regulatory Economics and Review of Financial Studies. She has also been a consultant on empirical questions and antitrust cases to various firms and government agencies.