Seminar 10 June 2013

Timothy P. Hubbard, Department of Economics, Colby College, USA

Monday, June 10, 2013 - 13:00 to 14:00

Efficacy of a Bidder Training Program: Lessons from LINC

 

Abstract

In an effort to accommodate a change in the U.S. Federal Highway Administration's goals towards “race-neutral methods" concerning the involvement of particular firms in procurement contracting, the Texas Department of Transportation (TxDOT) created a Learning, Information, Networking, Collaboration (LINC) bidder training program. We consider the cost and effiacy of this program using two empirical approaches. First, we identify salient features of the data in a number of reduced-form models. We find the LINC program did not alter entry behavior in a significant way, but did induce more aggressive bidding from program graduates. Next, we use these observations to inform a structural approach in which we estimate an asymmetric procurement auction model using ten years of data and leveraging firm-specific participation dates to distinguish behavior before-and-after. We use estimates of the latent cost distributions to simulate auctions in Monte Carlo experiments which allows us to quantify the effect the program had on cost for TxDOT as well as various measures of effiency.

 

JEL Classification: C54, D44.

Keywords: auctions, bidder training, disadvantaged business enterprises.

 

Contact:
Battista Severgnini, Associate Professor, bs.eco@cbs.dk
Cedric Schneider, Associate Professor, csc.eco@cbs.dk

 

The page was last edited by: Department of Economics // 12/17/2017