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Contracting with Capacity Constrained Suppliers

Author

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  • Parlane, S.

Abstract

In this paper I characterize the optimal and efficient mechanisms to allocate simultaneously 2 tasks to 2 capacity constrained suppliers. I show that efficiency can always be achieved using some modified second price auctions. The efficient mechanism is optimal in the case of monotone incentives. When countervailing incentives arise, production is distorted from efficiency over a nondegenerate interval of types so as to extract the full surplus over that interval.

Suggested Citation

  • Parlane, S., 1998. "Contracting with Capacity Constrained Suppliers," Papers 98/4, College Dublin, Department of Political Economy-.
  • Handle: RePEc:fth:dublec:98/4
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    Cited by:

    1. Yeon‐Koo Che & Jinwoo Kim & Konrad Mierendorff, 2013. "Generalized Reduced‐Form Auctions: A Network‐Flow Approach," Econometrica, Econometric Society, vol. 81(6), pages 2487-2520, November.
    2. Sarah Parlane, 2008. "Auctioning Horizontally Differentiated Items," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(2), pages 113-128, September.
    3. Isabelle Brocas, 2013. "Optimal allocation mechanisms with type-dependent negative externalities," Theory and Decision, Springer, vol. 75(3), pages 359-387, September.

    More about this item

    Keywords

    CONTRACTING ; AUCTIONS ; EFFICIENCY;

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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