All-receive procurement auctions

Simon Loertscher, Leslie M. Marx and Patrick Rey
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Simon Loertscher: University of Melbourne
Leslie M. Marx: Duke University [Durham]

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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.

Keywords: Resilience; Liquidity shocks; All-pay auctions; Multiple-receive procurement auctions (search for similar items in EconPapers)
Date: 2025-05-02
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