Common-Value Procurement Auctions with Renegotiation
Theoretical Economics Letters, Vol. 4, p. 619-622, 2014 doi: 10.4236/tel.2014.48078
5 Pages Posted: 11 Apr 2017
Date Written: August 18, 2014
Abstract
This note contains the equilibrium bid functions for two types of common-value procurement auctions: 1) a procurement auction in which bids represent an enforceable contract; 2) a procurement auction in which, upon learning the true cost of supplying the good, the winning bidder can renegotiate the contract with the buyer, and each bidder must submit a bond with their bid, which is returned at the end of the auction unless they are the low bidder and renegotiate the contract.
Keywords: Procurement Auctions, Renegotiation, Bidding, Equilibrium
JEL Classification: D44
Suggested Citation: Suggested Citation