Values-Based Food Procurement and Vendor Bid Decisions

Cities across the world are integrating values attributes (e.g., requirements or preferences for locally grown or raised items) into their public food procurement bid requests. Yet little is known about how vendors respond to these changes. Their response is important as a) cities first and foremost have an obligation to procure food (regardless of value attributes), and b) even without the integration of values attributes, few vendors respond to most bids. This study develops a novel Nash equilibrium framework to examine how food vendors adjust their bidding strategies in response to changes in bidding environments. Using an agent-based simulation method, we analyze competitive bidding dynamics, incorporating values including the providing of locally grown items and those produced by Minority and Women-Owned Businesses (MWBE), as well as vendor risk preferences, and farm price volatility. Our results reveal policy actions that can induce higher or lower bid prices. This game-theoretical framework for evaluating public food procurement policies provides actionable guidance for policymakers seeking to balance equity, sustainability, and cost-effectiveness in food procurement, therein enabling government food procurement programs to meet targeted goals while operating effectively.