Essays on risk management in procurement auctions [Elektronische Ressource] / vorgelegt von Andreas R. Engel

Essays on risk management inprocurement auctionsInaugural-Dissertationzur Erlangung des akademischen Grades eines Doktorsder Wirtschafts- und Sozialwissenschaften(Dr.rer.pol.)der Friedrich-Alexander-Universit¨at Erlangen-Nu¨rnbergvorgelegt von: Dipl.-Kfm. Andreas R. Engelaus MarktredwitzReferent: Professor Achim Wambach, Ph.D.Koreferent: Professor Dr. Kai-Ingo Voigt22. November 2005For my parents and NinaAbstractGovernments as well as private firms face the risk that a contractor goes bankruptbefore the completion of the work. In such an environment the possibility to declarebankruptcy makes bidders in a procurement auction bid more aggressively. Amongother results we show that revenue equivalence breaks down and that in contrast tothe standard auction theory, multi-sourcing, rationing, and other means to softencompetition may fare better than a standard auction. We also discuss commonlyusedmethodsofhowtoavoidruinousbiddinganddemonstratethatthesemightfarequite badly. Also, in contrast to the existing literature, cost-plus contracts might beno longer inefficient. In a second step, we extend our analysis to international tradetheory and show that the practice of supporting domestic firms with price pref-erences against international competition leads to the opposite result as intended,namely more bankrupt domestic firms.