Procurement with specialized firms
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Procurement with specialized firms. / Boone, Jan; Schottmüller, Christoph.
I: RAND Journal of Economics, Bind 47, Nr. 3, 2016, s. 661-687.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Procurement with specialized firms
AU - Boone, Jan
AU - Schottmüller, Christoph
PY - 2016
Y1 - 2016
N2 - This paper analyzes optimal procurement mechanisms when firms are specialized. The procurement agency has incomplete information concerning the firms’ cost functions and values high quality as well as low price. Lower type firms are cheaper (more expensive) than higher type firms when providing low (high) quality.With specialized firms, distortion is limited and a mass of types earns zeroprofits. The optimal mechanism can be inefficient: types providing lower second best welfare win against types providing higher second best welfare. As standard scoring rule auctions cannot always implement the optimal mechanism, we introduce a new auction format that implements the optimal mechanism.
AB - This paper analyzes optimal procurement mechanisms when firms are specialized. The procurement agency has incomplete information concerning the firms’ cost functions and values high quality as well as low price. Lower type firms are cheaper (more expensive) than higher type firms when providing low (high) quality.With specialized firms, distortion is limited and a mass of types earns zeroprofits. The optimal mechanism can be inefficient: types providing lower second best welfare win against types providing higher second best welfare. As standard scoring rule auctions cannot always implement the optimal mechanism, we introduce a new auction format that implements the optimal mechanism.
KW - Faculty of Social Sciences
KW - procurement
KW - specialized firms
KW - deregulation
KW - countervailing incentives
U2 - 10.1111/1756-2171.12143
DO - 10.1111/1756-2171.12143
M3 - Journal article
VL - 47
SP - 661
EP - 687
JO - RAND Journal of Economics
JF - RAND Journal of Economics
SN - 0741-6261
IS - 3
ER -
ID: 156337866