LAW AND ECONOMY : BIDDING MARKET - MERGER - DECREASING NUMBER OF CANDIDATES - ECONOMIC THEORY

The winner’s curse: Should it be taken into account in unilateral effects analysis?

Competition authorities are generally concerned about the decreasing number of bidders resulting from a merger in a bidding market. Economic theory shows, however, that a decrease in the number of candidates may result in a more competitive outcome of the tendering process. The paper discusses these theoretical results and empirical findings before considering how they could be taken into account when assessing the potential unilateral effects of a merger.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. Introduction 1. In tenders where suppliers are put in competition by a buyer, the good or service is usually awarded to the lowest bidder, i.e., the bidder with the lowest price. In this type of tendering, it is common to think that the more bidders there are, the lower the price won in the tender. This is the reasoning behind the Competition Authority's recent decision to assess the effects of a merger in a tendering [1]market: "in such a tendering]market[, according to economic theory, the greater the number of bidders, the more competitive the bids will be". 2. From an economic point of view, calls for tenders are similar to auctions, and this argument

Access to this article is restricted to subscribers

Already Subscribed? Sign-in

Access to this article is restricted to subscribers.

Read one article for free

Sign-up to read this article for free and discover our services.

 

PDF Version

Authors

Quotation

Éric Avenel, Gildas de Muizon, Nathalie Daley, The winner’s curse: Should it be taken into account in unilateral effects analysis?, September 2011, Concurrences N° 3-2011, Art. N° 35652, pp. 42-52

Visites 902

All reviews