Promoting economy: electronic reverse auctions under the ec directives on public procurement

The reverse electronic auction is a new competitive bidding procedure adopted by the recently enacted European Community (EC) directives on public procurement. It is submitted that the electronic reverse auction has the potential to reduce the tension between the European Commission and national policies of procurement, as it can decrease contracting costs, increase transparency and achieve better economic outcomes as a result of increased competition. This paper relies on auction theory in order to support such statements. A comparison between the traditional sealed-bid method and the reverse auction is further provided.