Split-award procurement auctions with uncertain scale economies: Theory and data
| Autor: | James J. Anton, Sandro Brusco, Giuseppe Lopomo |
|---|---|
| Rok vydání: | 2010 |
| Předmět: |
Economics and Econometrics
Auction theory Total cost Pooling TheoryofComputation_GENERAL Outcome (game theory) Economies of scale Unit (housing) Reverse auction Revenue equivalence Microeconomics Procurement Information asymmetry Economics Common value auction Business English auction Industrial organization ComputingMilieux_MISCELLANEOUS Finance |
| Zdroj: | Games and Economic Behavior. 69:24-41 |
| ISSN: | 0899-8256 |
| DOI: | 10.1016/j.geb.2009.09.001 |
| Popis: | In a number of observed procurements, the buyer has employed an auction format that allows for a split-award outcome. We focus on settings where the range of uncertainty regarding scale economies is large and, depending on cost realizations, the efficient allocations include split-award outcomes as well as sole-source outcomes (one active supplier). We examine the price performance and efficiency properties of split-award auctions under asymmetric information. In equilibrium, both award outcomes can occur: the split-award outcome arises only when it minimizes total costs; sole-source outcomes, however, occur too often from an efficiency viewpoint. Equilibrium bids involve pooling at a common price for the split award, and separation for sole-source awards. We provide conditions under which the buyer and suppliers all benefit from a split-award format relative to a winner-take-all unit auction format. Model predictions are assessed with data on submitted ‘step-ladder’ bid prices for a U.S. defense split-award procurement. |
| Databáze: | OpenAIRE |
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