Capacity Choice and the Impact of Sunk Costs on Bidding Strategies in Procurement Auctions

1997 ◽  
Author(s):  
Jörg Budde ◽  
Robert F. Göx
Keyword(s):  
Sunk Costs ◽  
Procurement Auctions ◽  
Bidding Strategies ◽  
Capacity Choice ◽  
The Impact

scholarly journals The Impact of Public Information on Bidding in Highway Procurement Auctions

2007 ◽  
Author(s):  
Dakshina G. De Silva ◽  
Timothy Dunne ◽  
Anuruddha Kankanamge ◽  
Georgia Kosmopoulou
Keyword(s):  
Public Information ◽  
Procurement Auctions ◽  
The Impact ◽  
Highway Procurement Auctions ◽  
Highway Procurement

The emerging threat of artificial intelligence on competition in liberalized electricity markets: A deep Q-network approach

2021 ◽  
Author(s):  
Danial Esmaeili Aliabadi ◽  
Katrina Chan
Keyword(s):  
Electricity Markets ◽  
Information Disclosure ◽  
End Users ◽  
Influential Factors ◽  
Bidding Strategies ◽  
Q Learning ◽  
Development Goals ◽  
Available Information ◽  
The Impact

Abstract BackgroundAccording to sustainable development goals (SDGs), societies should have access to affordable, reliable, and sustainable energy. Deregulated electricity markets have been established to provide affordable electricity for end-users through advertising competition. Although these liberalized markets are expected to serve this purpose, they are far from perfect and are prone to threats, such as collusion. Tacit collusion is a condition, in which power generating companies (GenCos) disrupt the competition by exploiting their market power. MethodsIn this manuscript, a novel deep Q-network (DQN) model is developed, which GenCos can use to determine the bidding strategies to maximize average long-term payoffs using available information. In the presence of collusive equilibria, the results are compared with a conventional Q-learning model that solely relies on past outcomes. With that, this manuscript aims to investigate the impact of emerging DQN models on the establishment of collusive equilibrium in markets with repetitive interactions among players. Results and ConclusionsThe outcomes show that GenCos may be able to collude unintentionally while trying to ameliorate long-term profits. Collusive strategies can lead to exorbitant electric bills for end-users, which is one of the influential factors in energy poverty. Thus, policymakers and market designers should be vigilant regarding the combined effect of information disclosure and autonomous pricing, as new models exploit information more effectively.

Cost Considerations in Optimal Capacity Acquisition: An Option Pricing Approach

2005 ◽  
Vol 17 (1) ◽  
pp. 75-93 ◽  
Author(s):  
Dileep G. Dhavale
Keyword(s):  
Option Pricing ◽  
Operating Cost ◽  
Adjustment Costs ◽  
Planning Horizon ◽  
Model Parameters ◽  
Put Options ◽  
Optimal Capacity ◽  
Capacity Choice ◽  
Option Pricing Model ◽  
The Impact

The optimal capacity choice is a tradeoff between the costs of shortage and excess capacity. This paper models the costs as the prices of an infinite number of European call and put options maturing continuously over the planning horizon. This approach allows a firm to consider the benefits of flexibility arising from delaying the acquisition of some capacity to a later time when more information about stochastic demand becomes available. The firm can then adjust the capacity to meet exact demand by purchasing in the spot market or reselling in the salvage market. The model determines optimal capacity by minimizing acquisition and capacity adjustment costs. I compare the model to extant models and discuss some special situations. Qualitative sensitivity analysis describes the impact of changes in model parameters on the optimal capacity. A Monte Carlo simulation compares this model with other models and results show that the Option Pricing model results in the lowest operating cost for all scenarios considered. A substantially simplified version of the model, which does not require complete understanding of option pricing methods, also performs well under certain conditions.

The Impact of eBay Ratings and Item Descriptions on Auction Prices

2005 ◽  
pp. 149-165
Author(s):  
Mark P. Sena ◽  
C. Edward Heath ◽  
Michael A. Webb
Keyword(s):  
High Quality ◽  
Price Variation ◽  
Bidding Strategies ◽  
Quality Product ◽  
Retail Prices ◽  
Auction Prices ◽  
Bid Prices ◽  
The Impact ◽  
The Relationship ◽  
High Quality Product

Buyers on eBay commonly rely on seller feedback ratings to determine bidding strategies.  Various studies have examined the impact of eBay’s reputation system on auction outcomes.  This study builds on prior research by examining the relationship between seller ratings on auction prices for two distinct product types, DVDs and designer watches and by benchmarking the bid prices against retail prices. The results show that eBay ratings explain a greater degree of price variation in Designer Watches than in DVDs.  The study also suggests that high quality product listings with such features as digital images, formatted pages, and product details may result in higher bid prices.

scholarly journals The impact of technological and non-technological innovations on export intensity in SMEs

2019 ◽  
Vol 26 (4) ◽  
pp. 612-638 ◽  
Author(s):  
Dragana Radicic ◽  
Khurshid Djalilov
Keyword(s):  
Firm Size ◽  
Public Support ◽  
Sunk Costs ◽  
Technological Innovations ◽  
Direct Test ◽  
Export Intensity ◽  
Data Set ◽  
Content Type ◽  
The Impact ◽  
Medium Firms

Purpose The purpose of this paper is to investigate how both technological and non-technological innovations influence export intensity in small and medium-sized enterprises (SMEs). In addition, the authors report results for each firm-size category of micro-, small and medium firms, and thus reflect SME heterogeneity. Design/methodology/approach The research methodology is based on the analysis of the Eurobarometer 2014 data set from 28 EU Member States, Switzerland and the USA covering the period 2011–2014. To statistically test the three defined research hypotheses on individual and joint effects of both types of innovation, a multiple treatment model was estimated. The advantage of this empirical strategy is that it takes into account the endogeneity of both technological and non-technological innovations. Moreover, the authors employ the production approach or the direct test of complementarity between technological and non-technological innovations. Findings Empirical findings indicate that technological innovations positively affect export intensity in small and medium firms, whereas non-technological innovations exert no influence on export intensity, regardless of the firm size. Moreover, the results from the direct test suggest no evidence of the complementary effects of technological and non-technological innovation on export intensity. Research limitations/implications The authors infer that SMEs would benefit more from public support targeting both exports and innovations than micro-firms, as the sunk costs of exports are too high for the latter. However, public support aimed at reducing fixed costs of exports could be particularly beneficial for micro-firms. Originality/value The research fills a literature gap on the joint impact of technological and non-technological innovations on export intensity while taking into account the endogeneity of innovation activities and SME heterogeneity.

scholarly journals The impact of public information on bidding in highway procurement auctions

2008 ◽  
Vol 52 (1) ◽  
pp. 150-181 ◽  
Author(s):  
Dakshina G. De Silva ◽  
Timothy Dunne ◽  
Anuruddha Kankanamge ◽  
Georgia Kosmopoulou
Keyword(s):  
Public Information ◽  
Procurement Auctions ◽  
The Impact ◽  
Highway Procurement Auctions ◽  
Highway Procurement

scholarly journals Empirical Analysis of Cost Estimation Accuracy in Procurement Auctions

2016 ◽  
Vol 11 (3) ◽  
pp. 1 ◽  
Author(s):  
Timothy D. Fry ◽  
Robert A. Leitch ◽  
Patrick R. Philipoom ◽  
Yu Tian
Keyword(s):  
Empirical Analysis ◽  
Cost Estimation ◽  
Highway Construction ◽  
State Department ◽  
Procurement Auctions ◽  
Estimation Accuracy ◽  
Department Of Transportation ◽  
Font Size ◽  
The Impact ◽  
Practical Implications

<p>This paper explores the impact of better cost estimation accuracy for a firm that bids on projects. Specifically, we investigate the effect of cost estimation accuracy on firms’ ability to submit lower bids amounts and their likelihood of winning in a bidding environment. We analyze highway construction bidding data between year 2001 and 2009 from a state department of transportation. Our results suggest that firms with more accurate cost estimation are more likely to lower their bids amounts and thus are more likely to win more bids than firms that have less cost estimation accuracy. The findings help us better understand the process and effect of cost estimation accuracy in the bidding environment and provide practical implications.</p><p><strong><span style="font-family: Times New Roman; font-size: medium;"> </span></strong></p>

scholarly journals The Impact of Timing on Bidding Behavior in Procurement Auctions of Contracts with Private Costs

2012 ◽  
Vol 42 (3) ◽  
pp. 321-343 ◽  
Author(s):  
Dakshina G. De Silva ◽  
Georgia Kosmopoulou ◽  
Beatrice Pagel ◽  
Ronald Peeters
Keyword(s):  
Procurement Auctions ◽  
Bidding Behavior ◽  
The Impact
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