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On discrimination in procurement auctions

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  • Jehiel, Philippe
  • Lamy, Laurent

Abstract

With exogenous participation, strong bidders should be discriminated against weak bidders to maximize revenues (Myerson 1981). When participation is endogenous and the set of potential entrants is large, optimal discrimination if any takes a very different form. Without incumbents, there should be no discrimination even if entrants come from groups with different characteristics. With incumbents, those should be discriminated against entrants no matter how strong/weak they are even if some share of their surplus is internalized by the designer. The optimal reserve policy in standard auctions is also analyzed to shed light on situations in which discrimination is not permitted.

Suggested Citation

  • Jehiel, Philippe & Lamy, Laurent, 2014. "On discrimination in procurement auctions," CEPR Discussion Papers 9790, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9790
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    References listed on IDEAS

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    Cited by:

    1. Philippe Jehiel & Laurent Lamy, 2018. "A Mechanism Design Approach to the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 735-760.
    2. Meroni, Claudia & Pimienta, Carlos, 2017. "The structure of Nash equilibria in Poisson games," Journal of Economic Theory, Elsevier, vol. 169(C), pages 128-144.
    3. Philippe Jehiel & Laurent Lamy, 2015. "On absolute auctions and secret reserve prices," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 241-270, June.
    4. De Sinopoli, Francesco & Meroni, Claudia & Pimienta, Carlos, 2014. "Strategic stability in Poisson games," Journal of Economic Theory, Elsevier, vol. 153(C), pages 46-63.

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    More about this item

    Keywords

    Asymmetric buyers; Auctions with endogenous entry; Bid preference programs; Cartels; Favoritism; Government procurement; Incumbents; Optimal auction design; Poisson games;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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