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All-receive procurement auctions

Author

Listed:
  • Simon Loertscher

    (University of Melbourne)

  • Leslie M. Marx

    (Duke University [Durham])

  • Patrick Rey

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We develop the procurement analogue to an all-pay auction for an independent private values model with identical distributions. In this all-receive procurement auction (ARPA), suppliers simultaneously submit bids. Suppliers with bids below (above) the reserve are paid their bids (are paid and produce nothing). The supplier with the largest bid below the reserve produces the good. With appropriately chosen reserves, which decrease in the number of suppliers, the ARPA is efficient and, given increasing virtual costs, implements the optimal procurement. Appropriately adjusted, ARPAs implement the optimal procurement in general. ARPAs can render supply chains resilient to nonanticipated liquidity shocks.

Suggested Citation

  • Simon Loertscher & Leslie M. Marx & Patrick Rey, 2025. "All-receive procurement auctions," Working Papers hal-05053694, HAL.
    • Handle: RePEc:hal:wpaper:hal-05053694
    Note: View the original document on HAL open archive server: https://hal.science/hal-05053694v1
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