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Auctioning Off Budgets in Procurement

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  • Claudio Rottner

Abstract

This article investigates a multi‐unit pay‐as‐bid procurement auction where the auctioneer fixes total spending and maximizes the quantity procured with their predetermined, secret budget. Previous literature has analyzed fixed‐quantity auctions, where the traded quantity is fixed but unknown to the bidders. Compared to such auctions, budget auctions lower the auctioneer's costs by introducing an additional interaction between a bidder's bids; bidders not only weigh a higher profit margin on a unit against a lower probability of supplying that unit; a higher margin on some unit also reduces the probability that the budget suffices to procure more units from the bidder.

Suggested Citation

  • Claudio Rottner, 2025. "Auctioning Off Budgets in Procurement," RAND Journal of Economics, RAND Corporation, vol. 56(4), pages 655-667, December.
    • Handle: RePEc:bla:randje:v:56:y:2025:i:4:p:655-667
    DOI: 10.1111/1756-2171.70028
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