Optimal procurement mechanism with observable quality

Juan-José Ganuza

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: In a procurement contract the Administration usually has some prior information about the quality of the bidding firms. The goal of this article is to characterize the optimal mechanism in such a situation, when firms have private information about their costs. The optimal mechanism selects low-quality firms more often than it would be efficient with perfect information. We also compare this mechanism with others frequently used by the Spanish Administration such as the first price sealed bid auction and the previous admission auction.

Keywords: Quality; Procurement; Auctions; Optimal; Mechanism (search for similar items in EconPapers)
Date: 1995-01
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:3963

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