This paper analyzes the impact of the reserve price on participation and the degree of competition in competitive tenderingfor public contracts. Our approach aims at reconciling the most recent developments in auction theory with the more practicalissues arising in centralized public procurement. In lowest price competitive tendering, we argue that, by lowering the reserve price, a (national) central purchasing body may reduce the purchasing cost at the expense of participation. Instead, if the contract is awarded by means of a scoring auction, the objectives of participation and cost reduction do not necessarily conflict with each other.reserve price; public contracts; central purchasing body; scoring auctions
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