Beating Coase at Monopoly

Lluis Bru, Daniel Cardona and József Sákovics

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: We study how a buyer unable to price discriminate should satisfy his demand in the presence of diseconomies of scale in production. Defying the Coase Conjecture, we show that auctioning contracts for lots (block sourcing) followed by setting a price to realize (part of) the residual gains from trade a ways leads to higher buyer surplus than simply setting a price.

Keywords: block sourcing; lot auction; monopoly; procurement; residual market; split awards (search for similar items in EconPapers)
JEL-codes: D42 D44 L12 (search for similar items in EconPapers)
Pages: 21
Date: 2019-06
New Economics Papers: this item is included in nep-com, nep-cta, nep-des, nep-ind and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:291

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