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Menu Auctions with Demand Uncertainty

Kala Krishna () and Torben Tranaes ()

No 03-14, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: We apply a Bernheim-Whinston (1986) type mechanism to a situation where a single buyer with uncertain demand wishes to buy from a small number of suppliers. We let suppliers bid a payment contingent on own quantity supplied, and another payment contingent on the realization of total demand. We show that there is a unique equilibrium which is also efficient. This equilibrium is equivalent to the one under the ‘truthful bids’ restriction used in the model without uncertainty in Bernheim-Whinston (1986).

Keywords: procurement; efficient auctions; multi unit auctions; uniqueness (search for similar items in EconPapers)
JEL-codes: C7 D4 L5 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-02
New Economics Papers: this item is included in nep-ind
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