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Joint procurement by heterogeneous buyers

Author

Listed:
  • Isabel Helmrath

    (University of Siegen)

  • Matthias Hunold
  • Johannes Muthers

Abstract

We analyze self- and joint procurement of countries with heterogeneous demand for a good offered by a price discriminating monopolist. We find that not only countries with low but also with high demand can benefit from committing to jointly procure equal quantities at a uniform price, even if the supplier is capacity constrained. Free-riding of outside buyers as well as too much heterogeneity of insiders make the buyer group unstable. Uniform price procurement without a quantity restriction is only stable with intra-group transfers. We relate our findings to the COVID-19 vaccine procurement of the European Union.

Suggested Citation

  • Isabel Helmrath & Matthias Hunold & Johannes Muthers, 2022. "Joint procurement by heterogeneous buyers," Economics working papers 2022-14, Department of Economics, Johannes Kepler University Linz, Austria.
    • Handle: RePEc:jku:econwp:2022-14
    Note: English
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    File URL: http://www.econ.jku.at/papers/2022/wp2214.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    joint procurement; group purchase; heterogeneous buyer group; vaccine procurement; price discrimination;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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