We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
On advance payments in tenders with budget constrained contractors.
- Authors
Birulin, Oleksii; Izmalkov, Sergei
- Abstract
We consider procurement auctions in settings where potential contractors have limited funds and face ex post risks, that is, cost overruns that can lead to the contractors' defaults. The bidding strategies and the default decisions are shaped by the incentive—willing to finish—constraints, and the resource—able to finish and feasibility—constraints. We examine payment schemes where the advance share of the award is paid immediately after the auction with the rest payable upon successful completion of the project. We identify the trade‐offs the procurer faces when choosing among such schemes, and explore the factors that influence the optimal advance share.
- Subjects
BUDGET; PAYMENT; CONTRACTORS; BIDDING strategies; AUCTIONS; DEFAULT (Finance); TENDER offers; COST overruns
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2022, Vol 53, Issue 4, p733
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/1756-2171.12428