Procurement Auctions and Unit-Price Contracts.
In competitive procurement auctions, bids often have the form of unit-price contracts (UPCs). We show that optimal bidding behavior in UPC auctions is typically nonmonotonic and therefore may lead to inefficient allocations. However, UPC auctions may still be desirable for the buyer when compared to efficient mechanisms such as the first-price auction. In a UPC auction, low types are subsidized, and the resulting stronger competition reduces the winning bidder's informational rent, which overcompensates the efficiency loss. Copyright 2003 by the RAND Corporation.
Year of publication: |
2003
|
---|---|
Authors: | Ewerhart, Christian ; Fieseler, Karsten |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 34.2003, 3, p. 569-81
|
Publisher: |
The RAND Corporation |
Saved in:
Saved in favorites
Similar items by person
-
Procurement auctions and unit-price contracts
Ewerhart, Christian, (2002)
-
Procurement auctions and unit-price contracts
Ewerhart, Christian, (2003)
-
Procurement Auctions and Unit-Price Contracts
Ewerhart, Christian, (2003)
- More ...