Abstract: Lowest bid and multi-criteria tender evaluation are the two main tender evaluation methods, and their misuse will affect the fairness and impartiality of the evaluation result. Based on the perspective of product difference, a correlation analysis of the essential characteristics of homogeneous, heterogeneous products and two tender evaluation methods was presented, and the effectiveness of cross elasticity as the quantitative standard for selecting a tender evaluation method was discussed. Considering that the cross elasticity was determined by the shape of the demand curve, the Logit demand model based on the choice of consumers’ random utility was adopted as the theoretical basis. Finally, three types of project cases were selected for the application analysis, which verified the feasibility of the method and provides a novel and effective way for the selection of evaluation methods in practice.

Key words: tender evaluation, product differentiation, cross elasticity