Efficient procurement with quality concerns

Pierre-Henri Morand () and Lionel Thomas
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Lionel Thomas: CRESE, Université de Franche-Comté

No 2006022, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: In this paper, we design the optimal procurement mechanisms when bidders are privately informed on efficiency and on observable but neither verifiable nor contractible quality. We show that most of the optimal procurement institutions are mixed procedure implying both separation and pooling. Thus, the existing takc-it-or-leave-it offers and procurement auc-tion appear only as polar cases. Moreover, we show that separation and pooling may affect the allocative efficiency of the procurement in a counter-intuitive way, such that a less bunching niechanism can be a more inefficient one.

Keywords: Mechanism design; procurement; non-contractible quality (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Pages: 28
Date: 2006-06-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://sites.uclouvain.be/econ/DP/REL/2006022.pdf (application/pdf)

Related works:
Working Paper: Efficient procurement with quality concerns (2006)
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