Effect of Entrant and Incumbent Bidding on Public Procurement Efficiency

Abstract

We empirically investigate the effect of entrants and incumbents on the efficiency of public procurement auctions. We use a unique data set that covers all Turkish public procurement auctions for the years 2004 to 2010. We find that procurement prices of auctions won by entrants are significantly lower. The survival analysis of entrants show that more than half of the entrants cannot survive in the public procurement market and cannot win more than one auction. The average number of wins by incumbent firms is ten compared to three by entrant firms.