Joint bidding and horizontal subcontracting

Jan Bouckaert; Geert Van Moer

doi:10.1016/j.ijindorg.2021.102727

Joint bidding and horizontal subcontracting

Jan Bouckaert^*
, Geert Van Moer

^*Corresponding author for this work

Economics, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

3 Citations (Scopus)

Abstract

This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.

Original language	English
Article number	102727
Peer-reviewed scientific journal	International Journal of Industrial Organization
Volume	76
Number of pages	41
ISSN	0167-7187
DOIs	https://doi.org/10.1016/j.ijindorg.2021.102727
Publication status	Published - 10.03.2021
MoE publication type	A1 Journal article - refereed

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 12 Responsible Consumption and Production

Keywords

511 Economics
Joint bidding
Horizontal subcontracting
Buyer power

Access to Document

10.1016/j.ijindorg.2021.102727

JOINT BIDDING AND HORIZONTAL SUBCONTRACTING BOUCKAERT-VAN MOER IJIO2021Auhor's accepted manuscript (AAM), 610 KBLicence: CC BY-NC-ND

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Cite this

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title = "Joint bidding and horizontal subcontracting",

abstract = "This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms{\textquoteright} bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.",

keywords = "511 Economics, Joint bidding, Horizontal subcontracting, Buyer power",

author = "Jan Bouckaert and \{Van Moer\}, Geert",

note = "Funding Information: We thank an anonymous referee and the editor Jos{\'e}-Luis Moraga-Gonz{\'a}lez for their most valuable comments and suggestions. We are also grateful to Roberto Alimonti, Jacques Cr{\'e}mer, Andreas Ehrenmann, Philip Haile, Elisabetta Iossa, Fran{\c c}ois Maniquet, Massimo Motta, Jorge Padilla, Matias Pietola, Joseph Podwol, Rune Stenbacka, and Alicia Van Cauwelaert for their most valuable comments. We are especially grateful to Patrick Rey for his detailed comments and challenging suggestions. We also thank seminar participants at the Department of Justice (Washington DC), DG COMP (Brussels), CMA (London), Bundeskartellamt (Bonn), the Finnish Competition and Consumer Authority, the Swedish competition authority, and participants at academic seminar and conference occasions. Bouckaert thanks the Flanders Research Foundation (FWO) for financial support (Grant \#G080912N). Van Moer is grateful to FWO for funding Grant \#11V5915N. Both authors also thank Engie for financial support (Grant \#FFP160134). This paper has previously circulated as “mergers and horizontal subcontracting”. Publisher Copyright: {\textcopyright} 2021 Copyright: Copyright 2021 Elsevier B.V., All rights reserved.",

year = "2021",

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doi = "10.1016/j.ijindorg.2021.102727",

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N1 - Funding Information: We thank an anonymous referee and the editor José-Luis Moraga-González for their most valuable comments and suggestions. We are also grateful to Roberto Alimonti, Jacques Crémer, Andreas Ehrenmann, Philip Haile, Elisabetta Iossa, François Maniquet, Massimo Motta, Jorge Padilla, Matias Pietola, Joseph Podwol, Rune Stenbacka, and Alicia Van Cauwelaert for their most valuable comments. We are especially grateful to Patrick Rey for his detailed comments and challenging suggestions. We also thank seminar participants at the Department of Justice (Washington DC), DG COMP (Brussels), CMA (London), Bundeskartellamt (Bonn), the Finnish Competition and Consumer Authority, the Swedish competition authority, and participants at academic seminar and conference occasions. Bouckaert thanks the Flanders Research Foundation (FWO) for financial support (Grant #G080912N). Van Moer is grateful to FWO for funding Grant #11V5915N. Both authors also thank Engie for financial support (Grant #FFP160134). This paper has previously circulated as “mergers and horizontal subcontracting”. Publisher Copyright: © 2021 Copyright: Copyright 2021 Elsevier B.V., All rights reserved.

PY - 2021/3/10

Y1 - 2021/3/10

N2 - This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.

AB - This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.

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KW - Horizontal subcontracting

KW - Buyer power

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ER -

Joint bidding and horizontal subcontracting

Abstract

UN SDGs

Keywords

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Nomination for the 2022 Antitrust Writing Awards

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Joint bidding and horizontal subcontracting

Abstract

UN SDGs

Keywords

Access to Document

OpenUrl availability

Other files and links

Fingerprint

Prizes

Nomination for the 2022 Antitrust Writing Awards

Cite this