Expiring budgets and dynamic competition in year-end public auctions : theory and evidence from Chile
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2018-01Metadata
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Engel Goetz, Eduardo
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Expiring budgets and dynamic competition in year-end public auctions : theory and evidence from Chile
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Abstract
Data from Chile's public procurement system shows that auctions become less competitive toward
the end of the scal year as the number of tenders increases because of use-it-or-lose-it budget provisions.
A dynamic price-competition model with capacity constraints rationalizes this nding and has additional predictions
that are con rmed by the data. In particular, rms infer a less competitive environment by the end
of the year and frequently set their bids around the price cap. This result is driven by the possibility of
becoming a single-bidder when competitors exhaust their capacity. Additionally, high-capacity rms usually
skew their victories toward the end of the year, while smaller rms win more tenders in earlier periods.
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TESIS PARA OPTAR AL GRADO DE MAGÍSTER EN ECONOMÍA
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URI: https://repositorio.uchile.cl/handle/2250/164083
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