Estache, AntonioIimi, Atsushi2012-03-192012-03-192009-03-01https://hdl.handle.net/10986/4051Limited competition has been a serious concern in infrastructure procurement. Importantly, however, there are normally a number of potential bidders initially showing interest in proposed projects. This paper focuses on tackling the question why these initially interested bidders fade out. An empirical problem is that no bids of fading-out firms are observable. They could decide not to enter the process at the beginning of the tendering or may be technically disqualified at any point in the selection process. This paper applies the double selection model to procurement data from road development projects in developing countries and examines why competition ends up restricted. It shows that bidders are self-selective and auctioneers also tend to limit participation depending on the size of contracts. Therefore, limited competition would likely lead to high infrastructure procurement costs.CC BY 3.0 IGOAFFILIATEDAFFILIATED ORGANIZATIONSAUCTIONAUCTION MARKETSAUCTION PROCESSAUCTIONSBIDBID EVALUATIONBID EVALUATION STAGEBID PRICEBIDDERBIDDERSBIDDINGBIDDING DOCUMENTSBIDSBUSINESS DEVELOPMENTBUSINESS RELATIONSHIPBUYERCAPABILITIESCAPACITY CONSTRAINTSCOMPETITIONCOMPETITIVE BIDDINGCOMPETITIVE TENDERSCOMPETITIVENESSCONSTRUCTION WORKSCONTRACTCONTRACT COSTCONTRACT DURATIONCONTRACTORSCONTRACTSCOST ESTIMATECOST ESTIMATESCREDIBILITYCREDITORDATADATABASEDEVELOPING COUNTRIESDEVELOPING COUNTRYDUMMY VARIABLESEQUIPMENTEVALUATION SYSTEMEXCHANGEEXPENDITUREFINANCEGOODGOVERNMENT EXPENDITUREGOVERNMENT PROCUREMENTHOLDINGINFORMATIONINFRASTRUCTURE DEVELOPMENTINSTRUMENTSINTERESTINTERNATIONAL BANKINTERNATIONAL ECONOMICSJOINT VENTURELACK OF COMPETITIONLOCAL BUSINESSMARKETMARKET COMPETITIONMARKET CONCENTRATIONMARKET CONDITIONSMARKETPLACEPOLITICAL ECONOMYPOTENTIAL BIDDERSPRICE AUCTIONSPRICE BIDPRICE COMPARISONPRICE COMPETITIONPRICE CRITERIAPRICE EFFECTPRICE EVALUATIONPRICESPRIVATE SECTORPROCUREMENTPROCUREMENT CONTRACTSPROCUREMENT PRACTICESPROCUREMENT PROCEDUREPRODUCTPROFITSPROSPECTIVE BIDDERSPUBLICPUBLIC CONTRACTSPUBLIC PROCUREMENTPUBLIC PROCUREMENT SYSTEMSPUBLIC SPENDINGPUBLIC WORKSPURCHASINGQUALIFICATION REQUIREMENTSQUALIFIED BIDDERSRENEGOTIATIONRESERVERESULTRESULTSSALESHARESUPPLYTECHNICAL BIDSTECHNICAL QUALIFICATIONTECHNICAL REQUIREMENTSTELECOMTENDER NOTICESTENDER PROCESSTENDERINGTENDERSTRANSACTIONTRANSACTION COSTSTRANSACTIONSTRANSPARENCYVALUEWEBWINNING BIDWorld Bank10.1596/1813-9450-4855