Economic Effects of Electronic Reverse Auctions

Abstract

This chapter describes the economic effects caused by the use of electronic reverse auctions along the procurement process. It argues that an analysis of these economic effects requires the consideration of the whole transaction process. The approaches of the new institutional economics provide a theoretical foundation for the analysis. The second part of the chapter deals with the single steps of an auction-integrated procurement process. Through this holistic view of the procurement process the authors emphasize the additional benefits and the danger caused by auctions. A better awareness of the procurement process enables better decisions concerning the choice of benefits which are worth pursuing.