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Split Awards, Procurement, and Innovation

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Author Info
James J. Anton
Dennis A. Yao

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Abstract

In many procurement settings, it is possible for a buyer to split a production award between suppliers. In this article, we develop a model of split-award procurement auctions in which the split choice is endogenous. We characterize the set of equilibrium bids and allocations for optimizing agents in an environment in which suppliers are fully informed about each other's costs. Split-award equilibria simultaneously exhibit strong collusive features and cost-efficiency properties. Despite the former property of the equilibria, upstream investment considerations may lead a buyer to prefer a split-award auction format to a winner-take-all auction format.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28198924%2920%3A4%3C538%3ASAPAI%3E2.0.CO%3B2-A&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 20 (1989)
Issue (Month): 4 (Winter)
Pages: 538-552
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Handle: RePEc:rje:randje:v:20:y:1989:i:winter:p:538-552

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Web page: http://www.rje.org

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  1. Kala Krishna & Torben Tranæs, 2003. "Menu Auctions with Demand Uncertainty," Discussion Papers 03-14, University of Copenhagen. Department of Economics. [Downloadable!]
  2. Gary Biglaiser & Nikolaos Vettas, 2007. "Dynamic price competition with capacity constraints and strategic buyers," Working Papers 24, Portuguese Competition Authority. [Downloadable!]
  3. Bruno Cassiman, 1994. "Research Joint Ventures and Optimal R&D Policy with Asymmetric Information," Economics Working Papers 263, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 1997. [Downloadable!]
  4. David Martimort & Lars Stole, 2003. "Contractual Externalities and Common Agency Equilibria," Advances in Theoretical Economics, Berkeley Electronic Press, vol. 3(1), pages 1037-1037. [Downloadable!] (restricted)
  5. Bruno Cassiman, 1994. "Research Joint Ventures and Optimal R&D Policy with Asymmetric Information," Discussion Papers 1105, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  6. Marcel Boyer & Jean-Jacques Laffont, 2000. "Competition and the Reform of Incentive Schemes in the Regulated Sector," CIRANO Working Papers 2000s-58, CIRANO. [Downloadable!]
    Other versions:
  7. Asher Wolinsky, 1994. "Regulation of Duopoly: Managed Competition vs. Regulated Monopolies," Discussion Papers 1116, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  8. Martimort, David & Moreira, Humberto Luiz Ataide, 2004. "Common agency with informed principals," Economics Working Papers (Ensaios Economicos da EPGE) 551, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  9. Brams, S.J. & Taylor, A.D., 1992. "Two Stage Auctions II: Common-Value Strategies and the Winner's Curse," Working Papers 92-02, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  10. MARTIMORT, David & STOLE, Lars, 1999. "Contractual Externalities and Common Agency Equilibria," IDEI Working Papers 110, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003. [Downloadable!]
  11. Gurnani, Haresh & Ray, Tridip, 2003. "A Procurement Auction Model Under Supplier Uncertainty," MPRA Paper 9990, University Library of Munich, Germany. [Downloadable!]
  12. Martin K Perry & Jozsef Sakovics, 2004. "Auctions for Split-Award Contracts," ESE Discussion Papers 90, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
    Other versions:
  13. Asher Wolinsky, 1993. "Regulation of Duopoly Under Asymmetric Information: Prices VS Quantities," Discussion Papers 1061, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  14. Juan Pablo Montero, 2004. "Learning in Final-Offer Arbitration with Multiple Offers," Documentos de Trabajo 270, Instituto de Economía. Pontificia Universidad Católica de Chile.. [Downloadable!]
  15. Inderst, Roman & Shaffer, Greg, 2004. "Retail Mergers: Buyer Power and Product Variety," CEPR Discussion Papers 4236, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  16. Biglaiser, Gary & Vettas, Nikolaos, 2004. "Dynamic Price Competition with Capacity Constraints and Strategic Buyers," CEPR Discussion Papers 4315, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  17. David Martimort & Lars Stole, 2001. "Contractual Externalities and Common Agency Equilibria," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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