A Model of Selective Tendering: Does Bidding Competition Deter Opportunism by Contractors? Export

@article{citeulike:94403, abstract = { Under contractual incompleteness, a bid-taker is obliged to depend on a self-enforcing contract where a winning bidder puts his reputation at stake. In this case the winning bidder will renege on contractual obligations if any one-shot gain from opportunism is greater than a long-term gain from maintaining his reputation. Since the long-term gain is decreasing in the number of competing bidders, excessive bidding competition may provoke the winning bidder's opportunism. We derive an optimum number of bidders which ensures the self-enforcing contract at the lowest expected procurement cost. We also show how excessive bidding competition leads to the phenomenon of cost overruns.}, author = {Kim, I. G.}, citeulike-article-id = {94403}, citeulike-linkout-0 = {http://dx.doi.org/10.1016/S1062-9769(99)80139-2}, citeulike-linkout-1 = {http://www.ingentaconnect.com/content/els/10629769/1998/00000038/00000004/art80139}, doi = {10.1016/S1062-9769(99)80139-2}, issn = {1062-9769}, journal = {The Quarterly Review of Economics and Finance}, keywords = {competition, doc, model, tender}, number = {4}, pages = {907--925}, posted-at = {2008-11-13 13:35:52}, priority = {2}, title = {A Model of Selective Tendering: Does Bidding Competition Deter Opportunism by Contractors?}, url = {http://dx.doi.org/10.1016/S1062-9769(99)80139-2}, volume = {38}, year = {1998} }

TY - JOUR ID - citeulike:94403 L3 - citeulike-article-id:94403 N2 - Under contractual incompleteness, a bid-taker is obliged to depend on a self-enforcing contract where a winning bidder puts his reputation at stake. In this case the winning bidder will renege on contractual obligations if any one-shot gain from opportunism is greater than a long-term gain from maintaining his reputation. Since the long-term gain is decreasing in the number of competing bidders, excessive bidding competition may provoke the winning bidder's opportunism. We derive an optimum number of bidders which ensures the self-enforcing contract at the lowest expected procurement cost. We also show how excessive bidding competition leads to the phenomenon of cost overruns. IS - 4 JF - The Quarterly Review of Economics and Finance SN - 1062-9769 EP - 925 TI - A Model of Selective Tendering: Does Bidding Competition Deter Opportunism by Contractors? VL - 38 SP - 907 KW - competition KW - doc KW - model KW - tender AU - Kim, IG PY - 1998/// UR - http://dx.doi.org/10.1016/S1062-9769(99)80139-2 ER -