Information Provision in Procurement Auctions

JoaquÍn Coleff, Daniel Garcia

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

We study the optimal provision of information in a procurement auction with horizontally differentiated goods. The buyer has private information about her preferred location on the product space and has access to a costless communication device. A seller who pays the entry cost may submit a bid comprising a location and a minimum price. We characterize the optimal information structure and show that the buyer prefers to attract only two bids. Further, additional sellers are inefficient since they reduce total and consumer surplus, gross of entry costs. We show that the buyer will not find it optimal to send public information to all sellers. On the other hand, she may profit from setting a minimum price and that a severe hold-up problem arises if she lacks commitment to set up the rules of the auction ex ante.

Original languageEnglish (US)
Pages (from-to)426-444
Number of pages19
JournalJournal of Public Economic Theory
Volume19
Issue number2
DOIs
StatePublished - Apr 1 2017

All Science Journal Classification (ASJC) codes

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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