Price Determination in Public Procurement: A Game Theory Approach
Journal: European Financial and Accounting Journal (Vol.2015, No. 1)Publication Date: 2015-03-15
- Price Determination in Public Procurement: A Game Theory Approach
- Effectiveness of Monitoring and Evaluation of Public Procurement Processes and Performance of Rwanda Public Procurement Authority (RPPA)
- On the issue of the concepts and their determination in the promising public procurement legislation of the Donetsk People’s Republic
- AN EMPIRICAL STUDY INTO PRICE DETERMINATION OF PUBLIC ISSUES IN INDIA THROUGH BOOK BUILDING PROCESS
- Control of Public Procurement and Impact of its Results on the Effectiveness of the Implementation of Procurement Procedures
Abstract
The article examines mechanism of bid price determination in public procurement by individual tenderers. A game theory approach is used to analyse this process. Firstly, a simple model with two firms illustrates the influence of expected opponent’s decision in bid price setting. Assumptions are released subsequently and a game theory based model describes price determination under assumption of expected profit maximization. It is shown that the bid price depends on the costs associated with the performance of the contract and the expected number of bidders. The relationship between the amount of the bid price and the number of bids is also confirmed on the findings of several empirical studies that are quoted.
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Last modified: 2015-11-29 04:30:50