How to Achieve Efficiency in Public Procurement Auctions

This paper empirically investigates the optimal number of bidders to achieve the lowest procurement prices in public procurement auctions. We use a unique data set provided by the Public Procurement Authority of Turkey that covers all government procurement auctions for the years 2004-2010, 472560 auctions. We conclude that there is an optimal number of bidders and this number vary for different types of products. These results indicate that auctioneers should promote competition in public procurement. The optimal number of bidders can be used by the authorities as focal points to analyze whether competitive efficiency is achieved in the public procurement auctions.