Intermediary Search for Suppliers in Procurement Auctions

Jun Honda

Publication: Working/Discussion PaperWU Working Paper

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Abstract

In many procurement auctions, entrants determine whether to participate in auctions accounting for their roles of intermediaries who search for the best (or the cheapest) input suppliers. We build on a procurement auction model with entry, combining with intermediary search for suppliers. The novel feature is that costs of bidders are endogenously determined by suppliers who strategically charge input prices. We show the existence of an equilibrium with price dispersion for inputs, generating cost heterogeneity among bidders. Interestingly, the procurement cost may rise as the number of potential bidders increases. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 1 Aug 2015

Publication series

NameDepartment of Economics Working Paper Series
No.203

WU Working Paper Series

  • Department of Economics Working Paper Series

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