Procurement with a strong insider

Luca Anderlini and GaOn Kim

Economics Letters, 2024, vol. 241, issue C

Abstract: We consider a procurement auction with a “strong” insider and N outside bidders. Within the confines of uniformly distributed independent private values, we compare a standard second price auction with a “tournament” in which the outsiders bid first to win the right to compete with the insider. The bids of the outsiders are binding and the highest bidder proceeds to a second-price competition with the insider. We take the insider to be “sufficiently strong” relative to the insiders.

Keywords: Strong insider; Tournament auction; Overbidding; Increased revenue (search for similar items in EconPapers)
JEL-codes: C70 C72 C79 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:241:y:2024:i:c:s0165176524002696

DOI: 10.1016/j.econlet.2024.111785

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