@article{Dosi:253215,
      recid = {253215},
      author = {Dosi, Cesare and Moretto, Michele},
      title = {Cost Uncertainty and Time Overruns in Public Procurement:  a Scoring Auction for a Contract with Delay Penalties},
      address = {2017-02-08},
      number = {843-2016-55938},
      series = {ET},
      pages = {25},
      month = {Feb},
      year = {2017},
      abstract = {Drawing on the real-options theory we analyse bidding  behaviour in a sealed-bid-first-score procurement auction  where suppliers, facing variable production costs, must  simultaneously report the contract price and the cost level  at which they intend to perform the project. We show that  this award mechanism is potentially able to maximize total  welfare. Next we look
at the time incentives required to  ensure compliance with the promised optimal trigger value.  We show that ex-post efficiency may call for delay  penalties higher than the anticipated harm caused by time  overruns, in so doing questioning the efficiency rationale  of existing liquidated damages rules.},
      url = {http://ageconsearch.umn.edu/record/253215},
      doi = {https://doi.org/10.22004/ag.econ.253215},
}