Procurement with specialized firms
| Title: | Procurement with specialized firms |
|---|---|
| Authors: | Jan Boone; Christoph Schottmüller; Jel Codes D |
| Contributors: | The Pennsylvania State University CiteSeerX Archives |
| Source: | http://www.econ.ku.dk/Kalender/seminarer/1510127/ProcurementSpecializedFirms.pdf/. |
| Publication Year: | 2012 |
| Collection: | CiteSeerX |
| Subject Terms: | procurement; specialization; participation constraint |
| Description: | This paper analyzes optimal procurement mechanisms in a setting typical for postliberalization industries. The procurement agency has incomplete information concerning the firms ’ cost functions and cares about quality as well as price. Low type firms are cheaper than high type firms in providing low quality but more expensive when providing high quality. Hence, each type is specialized in a certain quality level. We show that this specialization leads to a bunching of types on profits, i.e. a range of firms with different costfunctionsreceiveszeroprofitsandthereforenoinformationalrents. Iffirstbestwelfare is monotone in the efficiency parameter, the optimal mechanism can be implemented by a simple auction. If first best welfare is U-shaped in type, the optimal mechanism is not efficient in the sense that types providing a lower second best welfare win against types providing a higher second best welfare. |
| Document Type: | text |
| File Description: | application/pdf |
| Language: | English |
| Relation: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.405.8732; http://www.econ.ku.dk/Kalender/seminarer/1510127/ProcurementSpecializedFirms.pdf/ |
| Availability: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.405.8732; http://www.econ.ku.dk/Kalender/seminarer/1510127/ProcurementSpecializedFirms.pdf/ |
| Rights: | Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: | edsbas.7E1B7B2A |
| Database: | BASE |