Affirmative action as a cost cutting tool in procurement markets
研究弗吉尼亚州政府采购拍卖中，对弱势供应商提供投标折扣的平权行动如何通过加剧竞争、迫使大供应商降价，反而降低了买方的采购支出，且可变折扣策略比固定折扣节省更多。
Abstract We study the effect of a procurement market affirmative action program where buyers can provide bid discounts to preferred (small, women-owned, and minority-owned) vendors, thereby enabling them to win contracts even if they are not the cheapest option. These programs are typically framed as an exercise in social responsibility, since buyers will pay slightly more in order to support traditionally disadvantaged businesses. Using data from business-to-government procurement auctions in Virginia and a structural model of vendors’ bidding behavior, we demonstrate that preferred vendors generally have higher costs than their non-preferred counterparts. As a consequence, the affirmative action program can reduce buyers’ procurement expenditures in this context through intensifying competition and forcing large, low-cost vendors to significantly reduce their prices. The magnitude of these savings is over four times larger when buyers strategically use a variable bid discount policy rather than committing to a fixed bid discount ahead of time. Our findings demonstrate that these affirmative action programs need not be a financial burden for buyers. Instead, affirmative action programs that improve societal outcomes can also improve other key metrics like procurement spending.