14.30 - 15.30: Nathalie Gimenez
Title: How does synergy affect bidding behavior: evidence from a Brazilian procurement
Abstract: This paper studies how synergy affects bidding behavior in public procurement auctions. Using data from the Brazilian federal procurement, we exploit a unique institutional framework in which divisible goods are allocated through paired auctions: 25\% reserved exclusively for small firms and 75\% open to all. Since both auctions start simultaneously but end at random times, small firms participating in both are exposed to potential complementarities that can only be realized by winning more than one auction. This setting provides a natural experiment to identify synergy. The distribution of firms’ marginal costs is identified and estimated following Barkley, Groeger, and Miller (2021), using information revealed by firms’ bidding dynamics. Synergy is then identified by contrasting the cost distributions of winners and losers in paired auctions at the moment when complementarities may be realized. This approach allows us to recover the average synergy function and quantify how complementarities shape bidding strategies and effective costs.
15.30 - 16.30: Emmanuel Guerre
Title: Nonparametric Identification of First-Price Auction with Unobserved Competition: A Density Discontinuity Framework
Abstract: We consider nonparametric identification of independent private value first-price auction models, in which the analyst only observes winning bids. Our benchmark model assumes an exogenous number of bidders . We show that, if the bidders observe , the resulting discontinuities in the winning bid density can be used to identify the distribution of . The private value distribution can be nonparametrically identified in a second step. This extends, under testable identification conditions, to the case where is a number of potential buyers, who bid with some unknown probability. Identification also holds in presence of additive unobserved heterogeneity drawn from some parametric distributions. A parametric Bayesian estimation procedure is proposed. An application to Shanghai Government IT procurements finds that the imposed three bidders participation rule is not effective. This generates loss in the range of as large as of the appraisal budget for small IT contracts.
Local Organizers: Giuseppe Cavaliere & Giovanni Angelini