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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Procurement auctions and unit-price contracts |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | RAND Journal of Economics |
| Publisher | Wiley Open Access |
| Geographical Reach | international |
| ISSN | 0741-6261 |
| Volume | 34 |
| Number | 3 |
| Page Range | 569 - 581 |
| Date | 2003 |
| Abstract Text | 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 non-monotonic, 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. |
| Free access at | Related URL |
| Official URL | http://www.jstor.org/stable/1593747?&Search=yes&term=unit-price&term=auctions&term=contracts&term=procurement&list=hide&searchUri=%2Faction%2FdoBasicSearch%3FQuery%3Dprocurement%2Bauctions%2Band%2Bunit-price%2Bcontracts%26jc%3Dj100748%26wc%3Don&item=1&ttl |
| Digital Object Identifier | 10.2307/1593747 |
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