Empirical Analysis of Competition in Procurement Auctions

A vast amount of public services and goods are contracted through procurement auctions. Therefore it is very important to design these auctions in an optimal way. Typically, we are interested in two different objectives. The first objective is efficiency. Efficiency means that the contract is awarded to the bidder that values it the most, which in the procurement setting means the bidder that has the lowest cost of providing a service with a given quality. The second objective is to maximize public revenue. Maximizing public revenue means minimizing the costs of procurement. Both of these goals are important from the welfare point of view. In this thesis, I analyze field data from procurement auctions and show how empirical analysis can be used to help design the auctions to maximize public revenue. In particular, I concentrate on how competition, which means the number of bidders, should be taken into account in the design of auctions. In the first chapter, the main policy question is whether the auctioneer should spend resources to induce more competition. The information paradigm is essential in analyzing the effects of competition. We talk of a private values information paradigm when the bidders know their valuations exactly. In a common value information paradigm, the information about the value of the object is dispersed among the bidders. With private values more competition always increases the public revenue but with common values the effect of competition is uncertain. I study the effects of competition in the City of Helsinki bus transit market by conducting tests for common values. I also extend an existing test by allowing bidder asymmetry. The information paradigm seems to be that of common values. The bus companies that have garages close to the contracted routes are influenced more by the common value elements than those whose garages are further away. Therefore, attracting more bidders does not necessarily lower procurement costs, and thus the City should not implement costly policies to induce more competition. In the second chapter, I ask how the auctioneer can increase its revenue by changing contract characteristics like contract sizes and durations. I find that the City of Helsinki should shorten the contract duration in the bus transit auctions because that would decrease the importance of common value components and cheaply increase entry which now would have a more beneficial impact on the public revenue. Typically, cartels decrease the public revenue in a significant way. In the third chapter, I propose a new statistical method for detecting collusion and compare it with an existing test. I argue that my test is robust to unobserved heterogeneity unlike the existing test. I apply both methods to procurement auctions that contract snow removal in schools of Helsinki. According to these tests, the bidding behavior of two of the bidders seems consistent with a contract allocation scheme.

Wood procurement in the pressure of change.

Linear optimization model was used to calculate seven wood procurement scenarios for years 1990, 2000 and 2010. Productivity and cost functions for seven cutting, five terrain transport, three long distance transport and various work supervision and scaling methods were calculated from available work study reports. All method's base on Nordic cut to length system. Finland was divided in three parts for description of harvesting conditions. Twenty imaginary wood processing points and their wood procurement areas were created for these areas. The procurement systems, which consist of the harvesting conditions and work productivity functions, were described as a simulation model. In the LP-model the wood procurement system has to fulfil the volume and wood assortment requirements of processing points by minimizing the procurement cost. The model consists of 862 variables and 560 restrictions. Results show that it is economical to increase the mechanical work in harvesting. Cost increment alternatives effect only little on profitability of manual work. The areas of later thinnings and seed tree- and shelter wood cuttings increase on cost of first thinnings. In mechanized work one method, 10-tonne one grip harvester and forwarder, is gaining advantage among other methods. Working hours of forwarder are decreasing opposite to the harvester. There is only little need to increase the number of harvesters and trucks or their drivers from today's level. Quite large fluctuations in level of procurement and cost can be handled by constant number of machines, by alternating the number of season workers and by driving machines in two shifts. It is possible, if some environmental problems of large scale summer time harvesting can be solved.

Mapping Road Infrastructure in Developing Countries Applying Remote Sensing and GIS - The Case of the Taita Hills, Kenya

Road transport and infrastructure has a fundamental meaning for the developing world. Poor quality and inadequate coverage of roads, lack of maintenance operations and outdated road maps continue to hinder economic and social development in the developing countries. This thesis focuses on studying the present state of road infrastructure and its mapping in the Taita Hills, south-east Kenya. The study is included as a part of the TAITA-project by the Department of Geography, University of Helsinki. The road infrastructure of the study area is studied by remote sensing and GIS based methodology. As the principal dataset, true colour airborne digital camera data from 2004, was used to generate an aerial image mosaic of the study area. Auxiliary data includes SPOT satellite imagery from 2003, field spectrometry data of road surfaces and relevant literature. Road infrastructure characteristics are interpreted from three test sites using pixel-based supervised classification, object-oriented supervised classifications and visual interpretation. Road infrastructure of the test sites is interpreted visually from a SPOT image. Road centrelines are then extracted from the object-oriented classification results with an automatic vectorisation process. The road infrastructure of the entire image mosaic is mapped by applying the most appropriate assessed data and techniques. The spectral characteristics and reflectance of various road surfaces are considered with the acquired field spectra and relevant literature. The results are compared with the experimented road mapping methods. This study concludes that classification and extraction of roads remains a difficult task, and that the accuracy of the results is inadequate regardless of the high spatial resolution of the image mosaic used in this thesis. Visual interpretation, out of all the experimented methods in this thesis is the most straightforward, accurate and valid technique for road mapping. Certain road surfaces have similar spectral characteristics and reflectance values with other land cover and land use. This has a great influence for digital analysis techniques in particular. Road mapping is made even more complicated by rich vegetation and tree canopy, clouds, shadows, low contrast between roads and surroundings and the width of narrow roads in relation to the spatial resolution of the imagery used. The results of this thesis may be applied to road infrastructure mapping in developing countries on a more general context, although with certain limits. In particular, unclassified rural roads require updated road mapping schemas to intensify road transport possibilities and to assist in the development of the developing world.

Common Infrastructure for Finite-State Based Methods and Linguistics Descriptions

Finite-state methods have been adopted widely in computational morphology and related linguistic applications. To enable efficient development of finite-state based linguistic descriptions, these methods should be a freely available resource for academic language research and the language technology industry. The following needs can be identified: (i) a registry that maps the existing approaches, implementations and descriptions, (ii) managing the incompatibilities of the existing tools, (iii) increasing synergy and complementary functionality of the tools, (iv) persistent availability of the tools used to manipulate the archived descriptions, (v) an archive for free finite-state based tools and linguistic descriptions. Addressing these challenges contributes to building a common research infrastructure for advanced language technology.