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Optimal Procurement Mechanisms

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Author Info
Manelli, Alejandro M
Vincent, Daniel R
Abstract

The properties of optimal mechanisms in environments where sellers are privately informed about quality are analyzed. A methodology is provided for deriving conditions that are necessary and sufficient to determine when two simple trading environments maximize either social or private surplus. The commonly used auction mechanism is frequently inefficient in procurement environments. Often, the optimal mechanism is simply to order potential suppliers and to tender take-it-or-leave-it offers to each sequentially. The environments in which either mechanism is optimal are completely characterized. Copyright 1995 by The Econometric Society.

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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 63 (1995)
Issue (Month): 3 (May)
Pages: 591-620
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ecm:emetrp:v:63:y:1995:i:3:p:591-620

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  1. Crémer, Jacques & Khalil, Fahad, 1991. "Gathering Information before Signing a Contract," IDEI Working Papers 5, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
  2. repec:bep:thetop:v:3:y:2003:i:1:p:1094-1094 is not listed on IDEAS
  3. Asker, John & Cantillon, Estelle, 2007. "Procurement when Price and Quality Matter," CEPR Discussion Papers 6082, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Gian Luigi Albano & Federico Dini & Roberto Zampino, 2008. "Bidding for Complex Projects: Evidence From the Acquisitions of IT Services," Working Papers 2008.86, Fondazione Eni Enrico Mattei. [Downloadable!]
  5. Bel? Jerez, 2000. "General Equilibrium with Asymmetric Information: a Dual Approach," UFAE and IAE Working Papers 510.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  6. Marco Ottaviani, 2000. "The Value of Public Information in Monopoly," Econometric Society World Congress 2000 Contributed Papers 1479, Econometric Society. [Downloadable!]
    Other versions:
  7. Giuseppe Moscarini & Marco Ottaviani, 1998. "Price Competition for an Informed Buyer," Cowles Foundation Discussion Papers 1199, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  8. Asker, John & Cantillon, Estelle, 2005. "Optimal Procurement When Both Price and Quality Matter," CEPR Discussion Papers 5276, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Patrick Bajari & Robert McMillan & Steven Tadelis, . "Auctions versus Negotiations in Procurement: An Empirical Analysis," Working Papers 02007, Stanford University, Department of Economics. [Downloadable!]
  10. Nicola Doni, 2007. "A Comparison of Alternative Procedures for the Selection of the Private Partner in PPP Projects," Working Papers Series wp2007_10, Universita' degli Studi di Firenze, Dipartimento di Scienze Economiche. [Downloadable!]
  11. Abhinay Muthoo & Suresh Mutuswami, 2005. "Competition and Efficiency in Markets with Quality Uncertainty," Economics Discussion Papers 593, University of Essex, Department of Economics. [Downloadable!]
  12. Lei Wen & Haiwen Zhou, 2009. "Ability, Openness, and Managerial Decision Making," Atlantic Economic Journal, International Atlantic Economic Society, vol. 37(2), pages 197-208, June. [Downloadable!] (restricted)
  13. Tracy R. Lewis & David E. M. Sappington, 2000. "Motivating Wealth-Constrained Actors," American Economic Review, American Economic Association, vol. 90(4), pages 944-960, September. [Downloadable!] (restricted)
  14. Lionel Thomas, 2001. "Les marchés à tranches," Recherches économiques de Louvain, De Boeck Université, vol. 67(4), pages 437-451. [Downloadable!]
  15. Radkevitch, U.L. & Heck, H.W.G.M. van & Koppius, O.R., 2008. "Choosing between Auctions and Negotiations in Online B2B Markets for IT Services: The Effect of Prior Relationships and Performance," Research Paper ERS-2008-004-LIS Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  16. Rob van der Noll, 2006. "Competition for a Prize," Tinbergen Institute Discussion Papers 06-013/1, Tinbergen Institute. [Downloadable!]
  17. Howard Smith & John Thanassoulis, 2009. "Upstream Competition and Downstream Buyer Power," Economics Series Working Papers 420, University of Oxford, Department of Economics. [Downloadable!]
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  18. Patrick Bajari & Robert S. McMillan & Steve Tadelis, 2003. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," NBER Working Papers 9757, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. Michael Peters, 1995. "A Competitive Distribution of Auctions," Working Papers peters-95-03, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
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