Preferred suppliers in auction markets

Roberto Burguet and Martin K. Perry

RAND Journal of Economics, 2009, vol. 40, issue 2, 283-295

Abstract: This article examines agreements between a buyer and one of the suppliers which increase their joint surplus. The provisions of such agreements depend on the buyer's ability to design the rules of the final procurement auction. When the buyer does not have this ability, their joint surplus can be increased by an agreement which grants to the preferred supplier a right of first refusal on the lowest price from the other suppliers. When the buyer has this ability, their joint surplus can be maximized by a revelation game for the cost of the preferred supplier and a reserve price based on that cost.

Date: 2009
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Citations: View citations in EconPapers (29)

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https://doi.org/10.1111/j.1756-2171.2009.00065.x

Related works:
Working Paper: Preferred Suppliers in Auction Markets (2015)
Working Paper: Preferred Suppliers in Auction Markets (2008)
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