Split-award contracts with investment
AbstractThis paper studies procurement contracts where a buyer can either divide full production among multiple suppliers or award the entire production to a single supplier. We examine the effect of using multiple suppliers on investment incentives. In a framework of generalized second-price auctions with pre-auction investment, we show that the optimality of split-award depends on the socially efficient number of firms at the investment stage. When that number is greater than one, sole-sourcing is buyer-optimal. When that number is one, split-award lowers the buyer procurement cost.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 96 (2012)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505578
Split-award; Generalized second-price auctions; Investment;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin K. Perry & JÛzsef S·kovics, 2003.
"Auctions for Split-Award Contracts,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 51(2), pages 215-242, 06.
- Martin K Perry & Jozsef Sakovics, 2004. "Auctions for Split-Award Contracts," ESE Discussion Papers 90, Edinburgh School of Economics, University of Edinburgh.
- Martin Perry & Jozsef Sakovics, 2002. "Auctions for Split-Award Contracts," Departmental Working Papers 200204, Rutgers University, Department of Economics.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
- Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007.
"Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords,"
American Economic Review,
American Economic Association, vol. 97(1), pages 242-259, March.
- Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2005. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," NBER Working Papers 11765, National Bureau of Economic Research, Inc.
- Anton, James J. & Brusco, Sandro & Lopomo, Giuseppe, 2010.
"Split-award procurement auctions with uncertain scale economies: Theory and data,"
Games and Economic Behavior,
Elsevier, vol. 69(1), pages 24-41, May.
- James J. Anton & Sandro Brusco & Giuseppe Lopomo, 2010. "Split-Award Procurement Auctions with Uncertain Scale Economies: Theory and Data," Working Papers 10-32, Duke University, Department of Economics.
- Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
- Leandro Arozamena & Estelle Cantillon, 2004.
"Investment incentives in procurement auctions,"
ULB Institutional Repository
2013/9005, ULB -- Universite Libre de Bruxelles.
- Leandro Arozamena & Estelle Cantillon, 2004. "Investment Incentives in Procurement Auctions," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 1-18.
- Leandro Arozamena & Estelle Cantillon, 2004. "Investment Incentives in Procurement Auctions," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 1-18, 01.
- Arozamena, Leandro & Cantillon, Estelle, 2001. "Investment Incentives in Procurement Auctions," CEPR Discussion Papers 2676, C.E.P.R. Discussion Papers.
- Leandro Arozamena & Estelle Cantillon, 2000. "Investment Incentives in Procurement Auctions," Cowles Foundation Discussion Papers 1276, Cowles Foundation for Research in Economics, Yale University.
- Benny Moldovanu & Aner Sela, 2001.
"The Optimal Allocation of Prizes in Contests,"
American Economic Review,
American Economic Association, vol. 91(3), pages 542-558, June.
- James J. Anton & Dennis A. Yao, 1989. "Split Awards, Procurement, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 538-552, Winter.
- Roman Inderst, 2008. "Single sourcing versus multiple sourcing," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 199-213.
- Anton, James J & Yao, Dennis A, 1992. "Coordination in Split Award Auctions," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 681-707, May.
- Ian King & R. Preston McAfee & Linda Welling, 1993. "Industrial Blackmail: Dynamic Tax Competition and Public Investment," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 590-608, August.
- Wilson, Robert, 1979. "Auctions of Shares," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 675-89, November.
- Tunay I. Tunca & Qiong Wu, 2009. "Multiple Sourcing and Procurement Process Selection with Bidding Events," Management Science, INFORMS, vol. 55(5), pages 763-780, May.
- Thomas P. Lyon, 2006. "DOES DUAL SOURCING LOWER PROCUREMENT COSTS? -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 54(2), pages 223-252, 06.
- King, Ian & Welling, Linda & Preston McAfee, R., 1992. "Investment decisions under first and second price auctions," Economics Letters, Elsevier, vol. 39(3), pages 289-293, July.
- McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347.
- Piccione, Michele & Tan, Guofu, 1996. "Cost-Reducing Investment, Optimal Procurement and Implementation by Auctions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 663-85, August.
- Alcalde, José & Dahm, Matthias, 2013.
"Competition for procurement shares,"
Games and Economic Behavior,
Elsevier, vol. 80(C), pages 193-208.
- Alcalde, José & Dahm, Matthias, 2011. "Competition for Procurement Shares," Working Papers 2072/169682, Universitat Rovira i Virgili, Department of Economics.
- Alcalde, José & Matthias, Dahm, 2011. "Competition for Procurement Shares," QM&ET Working Papers 11-3, Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica.
- Alcalde, Jose & Dahm, Matthias, 2011. "Competition for procurement shares," MPRA Paper 32078, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.