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Menu Auctions with Demand Uncertainty

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Author Info
Kala Krishna (Pennsylvania State University)
Torben Tranæs (Danish National Institute of Social Research)

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Abstract

We apply a Bernheim-Whinston (1986) type mechanism to a situation where a single buyer with uncertain demand wishes to buy from a small number of suppliers. We let suppliers bid a payment contingent on own quantity supplied, and another payment contingent on the realization of total demand. We show that there is a unique equilibrium which is also efficient. This equilibrium is equivalent to the one under the ‘truthful bids’ restriction used in the model without uncertainty in Bernheim-Whinston (1986).

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File URL: http://www.econ.ku.dk/Research/Publications/pink/2003/0314.pdf
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Publisher Info
Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 03-14.

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Length: 26 pages
Date of creation: Feb 2003
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Handle: RePEc:kud:kuiedp:0314

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Related research
Keywords: procurement; efficient auctions; multi unit auctions; uniqueness;

Find related papers by JEL classification:
D4 - Microeconomics - - Market Structure and Pricing
L5 - Industrial Organization - - Regulation and Industrial Policy
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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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. 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. [Downloadable!] (restricted)
  2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
    Other versions:
  3. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July. [Downloadable!] (restricted)
  4. Grossman, Gene M & Helpman, Elhanan, 1995. "Trade Wars and Trade Talks," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 675-708, August. [Downloadable!] (restricted)
    Other versions:
  5. 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. [Downloadable!] (restricted)
  6. Robson, Arthur J., 1981. "Implicit oligopolistic collusion is destroyed by uncertainty," Economics Letters, Elsevier, vol. 7(1), pages 75-80. [Downloadable!] (restricted)
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