Block sourcing plus

Lluis Bru, Daniel Cardona and József Sákovics

European Journal of Operational Research, 2023, vol. 305, issue 3, 1130-1140

Abstract: We study how a buyer unable to (directly) price discriminate should satisfy his demand for a divisible good, produced with increasing marginal cost. As expected, we find that dynamic pricing cannot, while auctioning contracts for lots (block sourcing) need not, lead to a higher buyer surplus than setting a price (classical monopsony). However, we show that the optimal combination of block sourcing with setting a price for the residual supply is always strictly superior. Thus, we provide a rationale for two-stage contracting even in the absence of uncertainty.

Keywords: Supply chain management; Multi-sourcing; Split-award auction; Two-stage procurement (search for similar items in EconPapers)
JEL-codes: D42 D44 L12 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S037722172200515X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:305:y:2023:i:3:p:1130-1140

DOI: 10.1016/j.ejor.2022.06.039

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().