The Theory of Competitive Bidding

The Theory of Competitive Bidding explains how businesses or individuals vie for contracts or resources by proposing bids, often in auctions or negotiations. Each participant submits a proposal indicating what they are willing to accept or pay. The process encourages fair competition, aiming to allocate resources efficiently by selecting the most favorable bid—often the lowest price or highest value. This system helps ensure transparency and optimal distribution, as bidders are motivated to offer their best terms to win a contract or resource, fostering an environment where selection reflects genuine market value.