Optimal Cost Overruns: Procurement Auctions and Renegotiation

Arbeitspapier

Cost overrun is ubiquitous in public procurement. We argue that this can be the result of a constraint optimal award procedure when the procurer cannot commit not to renegotiate. If cost differences are more pronounced for more complex designs, it is optimal to fix a simple design ex ante and to renegotiate to a more complex and costlier design ex post. Specifying a simple design initially enhances competition in the auction. Moreover, the procurer cannot benefit from using a multi-dimensional auction, as the optimal scoring rule depends only on the price.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 5838

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Auctions ; Asymmetric and Private Information; Mechanism Design ; National Government Expenditures and Related Policies: Procurement
• Thema: auction ; cost overrun ; procurement ; renegotiation

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Herweg, Fabian ; Schwarz, Marco A.
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and ifo Institute (CESifo)
• (wo): Munich
• (wann): 2016

Weitere Informationen

• Handle: http://hdl.handle.net/10419/130455
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ