Procurement Auctions and Unit-Price Contracts

Christian Ewerhart and Karsten Fieseler

RAND Journal of Economics, 2003, vol. 34, issue 3, 569-81

Abstract: In competitive procurement auctions, bids often have the form of unit-price contracts (UPCs). We show that optimal bidding behavior in UPC auctions is typically nonmonotonic and therefore may lead to inefficient allocations. However, UPC auctions may still be desirable for the buyer when compared to efficient mechanisms such as the first-price auction. In a UPC auction, low types are subsidized, and the resulting stronger competition reduces the winning bidder's informational rent, which overcompensates the efficiency loss. Copyright 2003 by the RAND Corporation.

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (37)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Procurement Auctions and Unit-Price Contracts (2002)
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:rje:randje:v:34:y:2003:i:3:p:569-81

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().