Winner’s Curse and Entry in Highway Procurement (with Dakshina G. De Silva), accepted, RAND Journal of Economics
Summary: The "winner's curse," a situation where contractors are wary of underbidding on a contract due to inaccurately low cost estimates, decreases entry on highway infrastructure projects in Oklahoma and raises procurement costs.
Subcontracting Requirements and the Cost of Government Procurement, RAND Journal of Economics 55(1), 2024, 3-32.
Summary: Subcontracting requirements for Disadvantaged Business Enterprises (DBEs) lower markups, resulting in a 13.8 percent increase in DBE contract dollars and a negligible change in procurement costs in New Mexico.
Bid Credits in Simultaneous Ascending Auctions, Games and Economic Behavior 132, 2022, 189-203.
Summary: Bid credits in simultaneous ascending auctions—typically used when awarding spectrum—may lower revenues if bidders desire multiple objects and credited firms are competitive and bid locally.
Affirmative Action Subcontracting Regulations in Dynamic Procurement Auctions, International Journal of Industrial Organization 72, 2020, 102657.
Summary: Regulations requiring prime contractors to use disadvantaged subcontractors can lower bids over time while increasing the level of disadvantaged subcontracting if prime contractors maintain relationships with their subcontractors.
Resident Bid Preference, Affiliation, and Procurement Competition: Evidence from New Mexico, The Journal of Industrial Economics 67(2), 2019, 161-208.
Summary: Positive dependence—or affiliation—in highway construction project costs for contractors in New Mexico makes projects 3.3 percent more expensive but gives bid preferences more leverage in awarding contracts to resident contractors.
A Bid Strategy for Earlier Payment: Evidence and Implications of Front-End Loading in Procurement (with Justin Marion)
Abstract:
Liquidity management is key in industries with variable cash flows. We study how businesses in the highway construction industry manage cash flow by strategically bidding more on work with an earlier payout—a practice known as front-end loading. We find that small contractors, infrequent bidders, and Disadvantaged Business Enterprises front-end load more intensely, indicating a stronger preference for earlier payment. An equilibrium bidding model highlights a novel pathway through which this preference can affect procurement and its managerial and policy implications.
Highway Procurement During the Great Recession and Stimulus (with Dakshina G. De Silva).
Abstract:
We study highway procurement in Texas during the Great Recession and stimulus period, finding increased competition with more bidders and lower bids. We argue that the recession reduced opportunity costs, in part due to a slump in private sector construction. We evaluate costs and efficiency by developing methods to estimate an empirical auction model tailored for public bidding and demonstrate that contracts became more efficient and less costly. A counterfactual analysis confirms that infrastructure procurement during recessions not only stimulates the economy but also enables the government to complete necessary projects at lower costs.
Diversity versus Equity in Government Contracting
Abstract:
Many governments aim to achieve equity in contracting—meaning that all firms, especially those considered disadvantaged, have an equal opportunity to compete. The same governments often measure success through diversity in awards, determined by how frequently any disadvantaged firm wins. Through extending a statistical discrimination model to a contracting setting, I show that buyers can treat ex ante similar disadvantaged firms differently, indicating that award diversity may not translate into equity in opportunity for all disadvantaged firms. The model generates unique incentives and highlights various challenges to achieving equity in contracting—challenges that may not be addressed by incorporating a policy consistent with U.S. affirmative action laws. Subcontracting data on Disadvantaged Business Enterprises in New Mexico suggest that inequities can arise in practice.
Preferences and Political Economy in Public Procurement: Colloquium, (with Geo Quinot), The Economics and Law of Public Procurement: New Global Scenarios 1, 2024, 163-179.
The Stability in Student Organizations over Time, (with Omari Swinton and Gerald Daniels), The Journal of Campus Activities Practice & Scholarship 2(1), 2020, 45-56.
Evaluating the Efficacy of Place-Based Procurement Benefits.