Speculation in procurement auctions

Combinatorial Auctions in Procurement 1

Making the “right” pricing decision in sales or procurement is a complex task. While the types of pricing policies/methods used in the exchange of goods and services vary greatly, we can divide these mechanisms under two broad categories: posted price mechanisms and price discovery mechanisms. Under a posted price mechanism, a good is sold at a take-it-or-leave-it price determined by the seller...

On discrimination in procurement auctions∗

With exogenous participation, strong bidders should be discriminated against weak bidders to maximize revenues (Myerson 1981). When participation is endogenous and the set of potential entrants is large, optimal discrimination if any takes a very different form. Without incumbents, there should be no discrimination even if entrants come from groups with different characteristics. With incumbent...

Detecting Collusion in Procurement Auctions

Collusion is a widespread problem in procurement auctions. In this research, we study a class of econometric models, derived from economic theory, that are appropriate for describing both competitive and collusive behavior in many applied settings. The models we consider allow for asymmetries, randomization in the participation decision and non-trivial dynamics. We establish that if only bid da...

Favoritism in Asymmetric Procurement Auctions

I examine the economic costs and benefits of granting a right of first refusal to one of two bidders in a procurement auction. This right permits the favored bidder to win a contract by matching the bid of the competing bidder. Such a right, is often observed in business interactions, especially procurement. It is commonly thought that the right of first refusal lowers the payoff to the auction...

Repeated Procurement Auctions