Auctions for Split-Award Contracts
AbstractThe buyer of a homogeneous input divides his input requirements into two contracts that are awarded to different suppliers. He uses a sequential second-price auction to award a primary and a secondary contract. With a fixed number of suppliers the buyer pays a higher expected price than with a sole-source auction. The premium paid to the winner of the secondary contract must also be paid to the winner of the primary contract as an opportunity cost. When entry is endogenous, we identify the conditions under which a secondary contract can increase the number of suppliers and lower the expected price. Copyright Blackwell Publishing Ltd. 2003.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 51 (2003)
Issue (Month): 2 (06)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
Other versions of this item:
- Martin Perry & Jozsef Sakovics, 2002. "Auctions for Split-Award Contracts," Departmental Working Papers 200204, Rutgers University, Department of Economics.
- Martin K Perry & Jozsef Sakovics, 2004. "Auctions for Split-Award Contracts," ESE Discussion Papers 90, Edinburgh School of Economics, University of Edinburgh.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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- Gong, Jiong & Li, Jianpei & McAfee, R. Preston, 2012. "Split-award contracts with investment," Journal of Public Economics, Elsevier, vol. 96(1), pages 188-197.
- Alcalde, José & Dahm, Matthias, 2013.
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- Bichler, Martin & Schneider, Stefan & Guler, Kemal & Sayal, Mehmet, 2011. "Compact bidding languages and supplier selection for markets with economies of scale and scope," European Journal of Operational Research, Elsevier, vol. 214(1), pages 67-77, October.
- Sarah Parlane & Ying-Yi Tsai, 2013. "Optimal Contract Orders and Relationship-Specific Investments in Vertical Organizations," Working Papers 201316, School Of Economics, University College Dublin.
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