Designing Markets: Why Competitive Bidding and Auctions in Government Often Fail To Deliver.

Governments continue to embrace the market-like mechanisms of auctions and bidding. This essay considers how governments (as bid-takers) and firms and nonprofits (as bidders) strategically interact in the design and implementation of these systems. I assess with regard to the uniqueness of bidding in government four principles on the role of: credible commitments, rational collusion, the setting of reserve prices, and heterogeneity among bidders. I also address recent calls for expanding the use of dynamic pricing in government. [ABSTRACT FROM AUTHOR]