info:eu-repo/semantics/article
Procuring substitutes with (fine-tuned) first-price auctions
Fecha
2018-10Registro en:
Arozamena, Leandro Roberto; Weinschelbaum, Federico; Wolfstetter, Elmar G.; Procuring substitutes with (fine-tuned) first-price auctions; North-holland; Economics Letters; 171; 10-2018; 115-118
0165-1765
CONICET Digital
CONICET
Autor
Arozamena, Leandro Roberto
Weinschelbaum, Federico
Wolfstetter, Elmar G.
Resumen
Suppose a firm uses inputs that are substitutes. Each input is supplied by a single contractor. The firm would like to make suppliers compete. However, since inputs are imperfect substitutes, resorting to winner-take-all competition may not be an attractive option. We allow the firm to use a modified firstprice auction. It announces demand functions for each input and contractors simultaneously bid unit prices and sell according to announced input demands. We show that the firm has an incentive to announce demands that overstate input substitutability and understate its willingness to pay. In the extreme inputs are treated as perfect substitutes even if goods are independent.