Model Assumptions & Glossary

This simulator is intentionally simplified to support learning and exploration.

Educational simulation only. Not legal/financial advice. Do not use to plan real-world procurement collusion or bid manipulation.

Core Modeling Choices

Suppliers draw private costs (lognormal) and quality (beta) each round. A mild correlation can be configured.
Qualification strictness reduces eligibility rates; compliance failures add uncertainty and fixed costs.
Entry decisions use a simple expected-profit heuristic based on anticipated competition and bidding costs.
Bids are cost plus markup. Markup declines with competition and increases with complexity.
Execution risk (delays, disputes) rises with complexity and low margins, and falls with higher quality.
Bundling vs. splitting into lots is modeled as separate auctions with capacity limits per supplier.

Fixed and variable costs suppliers incur to prepare and submit bids (paperwork, compliance, analysis).

How demanding compliance rules are, affecting eligibility rates and compliance burden.

The rule used to select a winner: lowest price, quality threshold then lowest price, or scoring by price and quality.

Winning bid plus administrative cost, expected delay cost, dispute cost, and quality penalty.

Non-price frictions that affect participation, such as bid prep, compliance costs, and administrative review time.

Supplier choice to bid or not based on expected profitability after costs and qualification outcomes.