Communication of Preferences in Contests for Contracts
AbstractThis paper models a contest where several sellers compete for a contract with a single buyer. There are several styles of possible designs with a subset of them preferred by the buyer. We examine what happens when the buyer communicates information about his preferences. If the sellers are unable to change their style, then there is no effect on the welfare of the sellers. If the sellers are able to make adjustments, extra information may either boost or damage the sellers' profits. While the chance that there will be a proposal of a style preferred by the buyer cannot decrease, the buyer's surplus may increase or decrease.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18696.
Date of creation: 31 Mar 2008
Date of revision: 08 Aug 2009
Contests; Procurement; Communication;
Other versions of this item:
- Todd Kaplan, 2012. "Communication of preferences in contests for contracts," Economic Theory, Springer, vol. 51(2), pages 487-503, October.
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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