Intermediary Search for Suppliers in Procurement Auctions

Honda, Jun (2015) Intermediary Search for Suppliers in Procurement Auctions. Department of Economics Working Paper Series, 203. WU Vienna University of Economics and Business, Vienna.


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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)

Item Type: Paper
Keywords: Information Frictions / Search / Procurement / Auction / Vertical Relations / Entry Deterrence / Price Dispersion
Classification Codes: JEL D43, D44, D83, L13
Divisions: Departments > Volkswirtschaft
Depositing User: Claudia Tering-Raunig
Date Deposited: 13 Aug 2015 09:37
Last Modified: 22 Oct 2019 00:41


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