Alexander Rhode investigates performance-oriented measures of
Contracting Authorities in public tenders conducted within the EU.
He finds that Contracting Authorities can improve their performance
and attract more suppliers by publishing (as precise as possible)
starting prices in the beginning of a tender. First, he reports
that compared with private-sector negotiations, starting prices do
not create entry barriers in public procurement. Second, he finds
that increased numerical precision of starting prices is linearly
correlated with better performance and a higher number of bids. In
public procurement, suppliers tend to attribute increased
credibility to precise starting prices which reduces their
(perceived) entry risks.
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