Competition for Procurement Shares

Posted by D. Daniel Sokol

Jose Alacde(Universidad de Alicante, Departamento de Metodos Cuantitativos y Teoria Economica) and Dahm Matthias (Universitat Rovira i Virgili) explore Competition for Procurement Shares.

ABSTRACT: We propose a new procurement procedure which allocates shares of the total amount to be procured depending on the bids of suppliers. Among the properties of the mechanism are: (i) Bidders have an incentive to participate in the procurement procedure, as equilibrium payos are strictly positive. (ii) The mechanism allows to vary the extent to which armative action objectives, like promoting local industries, are pursued. (iii) Surprisingly, even accomplishing armative action goals, procurement expenditures might be lower than under a classical auction format.