ART - Promoting Economy: Electronic Reverse Auctions Under the EC Directives on Public Procurement 2004

The document discusses the use of electronic reverse auctions in public procurement, specifically in the context of the European Union (EU) and its directives on public procurement. The document highlights the advantages of electronic auctions, such as their ability to save taxpayers' money, allocate contracts to the most competitive firms, and ensure transparency in the contract award process. The English auction format is particularly favored due to its ability to secure best value for money and mitigate the problem of the 'winner's curse'. However, the document also mentions that the assumption of independent distribution in auctions reflects the situation where the object being auctioned may have a range of values. This implies that electronic auctions may not be suitable for contracts where the value cannot be easily quantified. In such cases, the traditional tendering procedure should be followed. The document also discusses the potential for collusion in reverse auctions and suggests that electronic auctions may be inferior to first-price auctions in terms of revenue when bidders are risk-averse. Overall, the document suggests that the use of more economic procedures, such as electronic auctions, can help achieve better economic performance and prosperity in Europe while still adhering to the EU's procurement directives.