Bid dispersion, competition and wage regulation: some field evidence from public contract bidding in British Columbia
The paper uses data from British Columbia to show that bid dispersion (the difference between the winning and next-lowest bids) in public school construction contract bidding is very compact, and that it varies inversely with the degree of competition. It also examines the impact of the Skill Development and Fair Wage Law (SDFWP), which promulgated wage scales and required contractors to pay them in public construction projects, on the bid dispersion. Multivariate analysis shows that bid dispersion declined after SDFWP. One possible interpretation of this result is that the contractors became less prone to the winner's curse following the SDFWP.