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Sequential versus Bundle Auctions for Recurring Procurement

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Author Info
Veronika Grimm
Abstract

We compare sequential and bundle procurement auctions in a framework of successive procurement situations, where current success positively or negatively affects future market opportunities. We find that in bundle auctions procurement cost is lower and less risky than in sequential standard auctions, but still higher than in the optimal sequential auction. Only a sequential second price auction leads to the efficient outcome.

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Publisher Info
Paper provided by University of Cologne, Department of Economics in its series Working Paper Series in Economics with number 27.

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Date of creation: 06 Jun 2006
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Handle: RePEc:kls:series:0027

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Related research
Keywords: Sequential auctions; bundling; stochastic scale effects; procurement;

Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Investment, or Financing

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References listed on IDEAS
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.:
  1. Morton I. Kamien & Lode Li & Dov Samet, 1989. "Bertrand Competition with Subcontracting," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 553-567, Winter. [Downloadable!] (restricted)
  2. Levin, Jonathan, 1997. "An Optimal Auction for Complements," Games and Economic Behavior, Elsevier, vol. 18(2), pages 176-192, February. [Downloadable!] (restricted)
  3. Armstrong, Mark, 2000. "Optimal Multi-object Auctions," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 455-81, July.
  4. Palfrey, Thomas R, 1983. "Bundling Decisions by a Multiproduct Monopolist with Incomplete Information," Econometrica, Econometric Society, vol. 51(2), pages 463-83, March. [Downloadable!] (restricted)
  5. repec:att:wimass:19199933 is not listed on IDEAS
  6. Avery, Christopher & Hendershott, Terrence, 2000. "Bundling and Optimal Auctions of Multiple Products," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 483-97, July.
  7. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  8. Branco, Fernando, 1997. "Sequential auctions with synergies: An example," Economics Letters, Elsevier, vol. 54(2), pages 159-163, February. [Downloadable!] (restricted)
  9. Gale, Ian, 1990. "A multiple-object auction with superadditive values," Economics Letters, Elsevier, vol. 34(4), pages 323-328, December. [Downloadable!] (restricted)
  10. Krishna, Vijay & Rosenthal, Robert W., 1996. "Simultaneous Auctions with Synergies," Games and Economic Behavior, Elsevier, vol. 17(1), pages 1-31, November. [Downloadable!] (restricted)
    Other versions:
  11. Menezes, F. & Monteiro, P.K., 1999. "Synergies and Price Trends in Sequential Auctions," Papers 366, Australian National University - Department of Economics.
    Other versions:
  12. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June. [Downloadable!] (restricted)
  13. Hadar, Josef & Russell, William R, 1969. "Rules for Ordering Uncertain Prospects," American Economic Review, American Economic Association, vol. 59(1), pages 25-34, March. [Downloadable!] (restricted)
  14. Albano, Gian Luigi & Germano, Fabrizio & Lovo, Stefano, 2001. "A comparison of standard multi-unit auctions with synergies," Economics Letters, Elsevier, vol. 71(1), pages 55-60, April. [Downloadable!] (restricted)
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  15. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January. [Downloadable!] (restricted)
  16. Thomas D. Jeitschko & Elmar Wolfstetter, 2002. "Scale Economies and the Dynamics of Recurring Auctions," Economic Inquiry, Oxford University Press, vol. 40(3), pages 403-414, July.
  17. repec:att:wimass:19908 is not listed on IDEAS
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Cited by:
(explanations, 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.)

  1. Veronika Grimm & Friederike Mengel & Giovanni Ponti & Lari Arthur Viianto, 2006. "Investment Incentives in Auctions: An Experiment," Working Paper Series in Economics 26, University of Cologne, Department of Economics. [Downloadable!]
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