On the Timing of Auctions : The Effects of Complementarities on Bidding, Participation, and Welfare

This paper empirically explores how varying the timing of a sequence of auctions affects both bidder behavior and the welfare of procurers and bidders. We develop a structural auction model with endogenous participation in which bidding may be either simultaneous or sequential, and bidders may perceive auctioned objects as either complements or substitutes. We then apply this model to data on auctions for roof-maintenance projects in Montreal. We show that complementarities can account for as high as 17% of the total size of a contract combination. Finally, we develop an algorithm to search a schedule of auctions and show that the total cost of projects can be reduced by more than 8%