Competitive Equilibrium Analysis for Repeated Procurement Auctions

In this study, we conduct a competitive equilibrium analysis for the repeated (sequential) procurement auctions. We consider capacitated suppliers (bidders), each with a U-shaped cost function that captures the economies (and dis-economies) of scale in bidding quantity. Cases with both homogenous and non-homogenous bidders are considered in a symmetric incomplete information setting. First we analyze a pair of bidders and derive their expected winning probabilities based on the way their cost functions interact. We then try to generalize the two-bidder settings to N-bidder settings. We derive key mechanism design results for this repeated auction using Myerson’s framework.