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Efficient procurement with quality concerns

Author

Listed:
  • Lionel Thomas

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

  • Pierre-Henri Morand

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

Abstract

In this paper, we design the optimal procurement mechanisms when bidders are privately informed on efficiency and on observable but neither verifiable nor contractible quality. We show that most of the optimal procurement institutions are mixed procedure implying both separation and pooling. Thus, the existing takc-it-or-leave-it offers and procurement auc-tion appear only as polar cases. Moreover, we show that separation and pooling may affect the allocative efficiency of the procurement in a counter-intuitive way, such that a less bunching niechanism can be a more inefficient one.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lionel Thomas & Pierre-Henri Morand, 2006. "Efficient procurement with quality concerns," Post-Print hal-00448801, HAL.
  • Handle: RePEc:hal:journl:hal-00448801
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    References listed on IDEAS

    as
    1. Yeon-Koo Che, 1993. "Design Competition through Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 668-680, Winter.
    2. Armstrong, Mark, 1999. "Optimal Regulation with Unknown Demand and Cost Functions," Journal of Economic Theory, Elsevier, vol. 84(2), pages 196-215, February.
    3. Leonardo Rezende, 2009. "Biased procurement auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 169-185, January.
    4. Mark Armstrong, 2000. "Optimal Multi-Object Auctions," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 455-481.
    5. Mark Armstrong & John Vickers, 2000. "Multiproduct Price Regulation Under Asymmetric Information," Journal of Industrial Economics, Wiley Blackwell, vol. 48(2), pages 137-160, June.
    6. Armstrong, Mark & Vickers, John, 2000. "Multiproduct Price Regulation under Asymmetric Information," Journal of Industrial Economics, Wiley Blackwell, vol. 48(2), pages 137-160, June.
    7. Christopher Avery & Terrence Hendershott, 2000. "Bundling and Optimal Auctions of Multiple Products," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 483-497.
    8. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    9. Armstrong, Mark & Rochet, Jean-Charles, 1999. "Multi-dimensional screening:: A user's guide," European Economic Review, Elsevier, vol. 43(4-6), pages 959-979, April.
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    Cited by:

    1. Goeree, Jacob K. & Kushnir, Alexey, 2016. "Reduced form implementation for environments with value interdependencies," Games and Economic Behavior, Elsevier, vol. 99(C), pages 250-256.
    2. Nicolas Fugger & Elena Katok & Achim Wambach, 2016. "Collusion in Dynamic Buyer-Determined Reverse Auctions," Management Science, INFORMS, vol. 62(2), pages 518-533, February.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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