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Information Provision in Procurement Auctions

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  • Joaquin Coleff
  • Daniel Garcia

Abstract

We analyze the optimal provision of information in a procurement auction with horizontally di fferentiated goods. The buyer has private information about her preferred location on the product space and has access to a costless communication device. A seller who pays the entry cost may submit a bid comprising a location and a minimum price. We characterize the optimal information structure and show that the buyer prefers to attract only two bids. Further, additional sellers are inefficient since they reduce total and consumer surplus, gross of entrycosts. We show that the buyer will not fi nd it optimal to send public information to all sellers. On the other hand, she may pro t from setting a minimum price and that a severe hold-up problem arises if she lacks commitment to set up the rules of the auction ex-ante.

Suggested Citation

  • Joaquin Coleff & Daniel Garcia, 2013. "Information Provision in Procurement Auctions," Documentos de Trabajo 11010, Universidad del Rosario.
    • Handle: RePEc:col:000092:011010
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    File URL: http://www.urosario.edu.co/economia/documentos/pdf/dt142/
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    References listed on IDEAS

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    1. Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-194, March.
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    Cited by:

    1. Raphaela Hennigs, 2021. "Conflict prevention by Bayesian persuasion," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 710-731, August.
    2. Marian W. Moszoro & Pablo T. Spiller, 2019. "Political contestability and public contracting," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(5), pages 945-966, October.

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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
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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