Split-award contracts with investment

• 成果类型: Article
• 署名作者: Gong, Jiong; Li, Jianpei; McAfee, R. Preston
• 署名单位: Yahoo! Inc; University of International Business & Economics
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2011.10.001
• 发表日期: 2012
• 页码: 188-197
• 关键词: Split-award; Generalized second-price auctions; INVESTMENT

摘要

This paper studies procurement contracts where a buyer can either divide full production among multiple suppliers or award the entire production to a single supplier. We examine the effect of using multiple suppliers on investment incentives. In a framework of generalized second-price auctions with pre-auction investment, we show that the optimality of split-award depends on the socially efficient number of firms at the investment stage. When that number is greater than one, sole-sourcing is buyer-optimal. When that number is one, split-award lowers the buyer procurement cost. (C) 2011 Elsevier B.V. All rights reserved.