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Preferential treatment in procurement auctions through information revelation

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  • Domenico Colucci

    ()
    (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze)

  • Nicola Doni

    ()
    (Dipartimento di Scienze dell'Economia - Università degli Studi di Firenze)

  • Vincenzo Valori

    ()
    (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze)

Abstract

We study a model of procurement auctions in which information policies can be used to treat two heterogeneous suppliers asymmetrically. The buyer is shown to be better off revealing information about her preferences to the weak supplier only, when there is a sufficient cost difference between the weak and the strong. Conversely, when the two competitors have similar cost structures, for the buyer it is best to disclose her preferences publicly.

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Bibliographic Info

Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Mathematical Economics with number 2012-06.

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Length: 10 pages
Date of creation: Oct 2012
Date of revision:
Publication status: Published in Economics Letters
Handle: RePEc:flo:wpaper:2012-06

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Keywords: procurement; information revelation; discriminatory policy; asymmetric auctions;

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References

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  1. Kim, In-Gyu, 1997. "Government procurement and asymmetric rebate auctions," Economics Letters, Elsevier, vol. 54(3), pages 245-250, July.
  2. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2011. "Information Disclosure in Procurement Auctions with Horizontally Differentiated Suppliers," Working Papers - Mathematical Economics 2011-02, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  3. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
  4. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 413-38, July.
  5. Michael H. Rothkopf & Ronald M. Harstad & Yuhong Fu, 2003. "Is Subsidizing Inefficient Bidders Actually Costly?," Management Science, INFORMS, vol. 49(1), pages 71-84, January.
  6. Hubbard, Timothy P. & Paarsch, Harry J., 2009. "Investigating bid preferences at low-price, sealed-bid auctions with endogenous participation," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 1-14, January.
  7. repec:wop:humbsf:2000-72 is not listed on IDEAS
  8. Esther Gal-Or & Mordechai Gal-Or & Anthony Dukes, 2007. "Optimal information revelation in procurement schemes," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 400-418, 06.
  9. Li, Huagang & Riley, John G., 2007. "Auction choice," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1269-1298, December.
  10. Lee, Joon-Suk, 2008. "Favoritism in asymmetric procurement auctions," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1407-1424, November.
  11. Andrew Schotter & Allan Corns, 1999. "Can Affirmative Action Be Cost Effective? An Experimental Examination of Price-Preference Auctions," American Economic Review, American Economic Association, vol. 89(1), pages 291-305, March.
  12. Todd Kaplan & Shmuel Zamir, 2012. "Asymmetric first-price auctions with uniform distributions: analytic solutions to the general case," Economic Theory, Springer, vol. 50(2), pages 269-302, June.
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