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  • 1.
    Hyytinen, Ari
    et al.
    University of Jyväskylä, School of Business and Economics.
    Lundberg, Sofia
    Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
    Toivonen, Otto
    Aalto University & KU Leuven, Faculty of Business and Economics (FBE); CEPR.
    Design of public procurement auctions: evidence from cleaning contracts2018In: The Rand Journal of Economics, ISSN 0741-6261, E-ISSN 1756-2171, Vol. 49, no 2, p. 398-426Article in journal (Refereed)
    Abstract [en]

    We analyze a regime change from beauty contests to first‐price sealed‐bid and scoring auctions, using Swedish data on public procurement of cleaning services. In beauty contests, the lowest bid often lost, leaving substantial money on the table. The procurement costs were similar before and after the regime change: (i) Entry strongly decreases the procurement cost but did not change. Entry would have decreased had the municipalities not adjusted the objects of auctions. (ii) Municipalities favored in‐house suppliers in the old regime, leading to more aggressive bidding by others. With favoritism reduced, these changes balanced each other out.

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