Public procurements with secret reserve prices and negotiation: an auction theoretic analysis for the private values case

• Autor(a) principal: Bugarin, Mauricio Soares
• Data de Publicação: 2022
• Outros Autores: Portugal, Adriana Cuoco
• Tipo de documento: Artigo
• Idioma: por
• Título da fonte: Estudos Econômicos (São Paulo)
• Texto Completo: https://www.revistas.usp.br/ee/article/view/191356
• topic: Licitações públicas; Preço de reserva anunciado; Preço de reserva secreto; Negociação em licitações; Public procurement auctions; Public reservation price; Secret reservation price; Ex post negotiation in procurements

This article compares alternative mechanism designs for the procurement of public works or services. It analyzes the simple reverse auction with no reservation price, the reverse auction with public reservation price, with secret reservation price and, finally, with secret reservation price and the possibility of negotiation when the winning bid is above the reservation price. We make use of the framework of auction theory with symmetric, independent, and identically distributed private values and risk neutral participants. The theoretical analysis and the simulations suggest that setting a reservation price yields better results for the government.Moreover, it is more advantageous to announce the reservation price if this price is low, andmore advantageous to keep it secret if that price is high. Ex post negotiation in the secret reserveprice model induces an increase in participants’ bids. However, if the social welfare thatthe public works or services create sufficiently exceeds its reservation cost, then the negotiationmechanism may be desirable.