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Buyer Alliances as Countervailing Power in WIC Infant-Formula Auctions

  • Davis, David E.

    ()

    (Department of Economics,South Dakota State University)

US government agencies in WIC infant-formula procurement auctions receive lower bids and final prices when they are in buyer’s alliances than when they are unallied. The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) uses an auction to procure infant formula. Manufacturers bid on the right to be an agency’s sole supplier by offering a rebate on formula sold through WIC. This paper investigates whether bidders are more aggressive when buyers band together to jointly offer infant formula contracts. Results suggest that WIC agencies that band together to form an alliance receive stronger bids.

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File URL: http://repec-sda.sdstate.edu/repec/sda/pdf/CountevailingPower.pdf
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File URL: http://repec-sda.sdstate.edu/repec/sda/pdf/14_5_28_a_3rdRevise_BiddingforSole-SourceContracts.pdf
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Paper provided by South Dakota State University, Department of Economics in its series SDSU Working Papers in Progress with number 12011.

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Length: pages 24 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:sda:workpa:12011
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  3. David E. Davis, 2012. "Bidding for WIC Infant Formula Contracts: Do Non-WIC Customers Subsidize WIC Customers?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 80-96.
  4. Oliveira, Victor & Davis, David E., 2006. "Recent Trends and Economic Issues in the WIC Infant Formula Rebate Program," MPRA Paper 6657, University Library of Munich, Germany.
  5. Oliveira, Victor & Frazao, Elizabeth & Smallwood, David M., 2010. "Rising Infant Formula Costs to the WIC Program: Recent Trends in Rebates and Wholesale Prices," Economic Research Report 59384, United States Department of Agriculture, Economic Research Service.
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  20. Oliveira, Victor & Frazao, Elizabeth & Smallwood, David M., 2011. "The Infant Formula Market: Consequences of a Change in the WIC Contract Brand," Economic Research Report 118020, United States Department of Agriculture, Economic Research Service.
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