IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v117y2012i3p883-886.html
   My bibliography  Save this article

Preferential treatment in procurement auctions through information revelation

Author

Listed:
  • Colucci, Domenico
  • Doni, Nicola
  • Valori, Vincenzo

Abstract

We study a model of procurement auctions in which information policies can be used to treat two heterogeneous suppliers asymmetrically. The buyer is shown to be better off revealing information about her preferences to the weak supplier only, when there is a sufficient cost difference between the weak and the strong. Conversely, when the two competitors have similar cost structures, for the buyer it is best to disclose her preferences publicly.

Suggested Citation

  • Colucci, Domenico & Doni, Nicola & Valori, Vincenzo, 2012. "Preferential treatment in procurement auctions through information revelation," Economics Letters, Elsevier, vol. 117(3), pages 883-886.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:883-886
    DOI: 10.1016/j.econlet.2012.07.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512003862
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2012.07.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    2. Kim, In-Gyu, 1997. "Government procurement and asymmetric rebate auctions," Economics Letters, Elsevier, vol. 54(3), pages 245-250, July.
    3. Eric Maskin & John Riley, 2000. "Asymmetric Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 413-438.
    4. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2011. "Information Disclosure in Procurement Auctions with Horizontally Differentiated Suppliers," Working Papers - Economics wp2011_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    5. Michael H. Rothkopf & Ronald M. Harstad & Yuhong Fu, 2003. "Is Subsidizing Inefficient Bidders Actually Costly?," Management Science, INFORMS, vol. 49(1), pages 71-84, January.
    6. Li, Huagang & Riley, John G., 2007. "Auction choice," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1269-1298, December.
    7. Hubbard, Timothy P. & Paarsch, Harry J., 2009. "Investigating bid preferences at low-price, sealed-bid auctions with endogenous participation," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 1-14, January.
    8. Andrew Schotter & Allan Corns, 1999. "Can Affirmative Action Be Cost Effective? An Experimental Examination of Price-Preference Auctions," American Economic Review, American Economic Association, vol. 89(1), pages 291-305, March.
    9. Lee, Joon-Suk, 2008. "Favoritism in asymmetric procurement auctions," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1407-1424, November.
    10. Esther Gal-Or & Mordechai Gal-Or & Anthony Dukes, 2007. "Optimal information revelation in procurement schemes," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 400-418, June.
    11. Todd Kaplan & Shmuel Zamir, 2012. "Asymmetric first-price auctions with uniform distributions: analytic solutions to the general case," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 269-302, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2012. "Information revelation in procurement auctions: an equivalence result," Working Papers - Mathematical Economics 2012-07, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    2. Qian, Cheng & Anderson, Edward, 2020. "Buyer’s optimal information revelation strategy in procurement auctions," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1011-1025.
    3. Tunay I. Tunca & D. J. Wu & Fang (Vivian) Zhong, 2014. "An Empirical Analysis of Price, Quality, and Incumbency in Procurement Auctions," Manufacturing & Service Operations Management, INFORMS, vol. 16(3), pages 346-364, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2015. "Information policies in procurement auctions with heterogeneous suppliers," Journal of Economics, Springer, vol. 114(3), pages 211-238, April.
    2. Barbosa, Klenio & Boyer, Pierre C., 2021. "Discrimination in Dynamic Procurement Design with Learning-by-doing," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    3. Alcalde, José & Dahm, Matthias, 2024. "On the trade-off between supplier diversity and cost-effective procurement," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 63-90.
    4. José Alcalde & Matthias Dahm, "undated". "Supplier Diversity before the Time of Cholera," Discussion Papers in Economics 20/07, Division of Economics, School of Business, University of Leicester.
    5. Alcalde, José & Dahm, Matthias, 2020. "Affirmative Action Through Endogenous Set-Asides," QM&ET Working Papers 20-1, University of Alicante, D. Quantitative Methods and Economic Theory.
    6. Alcalde, José & Dahm, Matthias, 2013. "Competition for procurement shares," Games and Economic Behavior, Elsevier, vol. 80(C), pages 193-208.
    7. Marion, Justin, 2007. "Are bid preferences benign? The effect of small business subsidies in highway procurement auctions," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1591-1624, August.
    8. Domenico Colucci & Nicola Doni & Vincenzo Valori, 2012. "Information revelation in procurement auctions: an equivalence result," Working Papers - Mathematical Economics 2012-07, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    9. Timothy P. Hubbard & Rene Kirkegaard, 2015. "Asymmetric Auctions with More Than Two Bidders," Working Papers 1502, University of Guelph, Department of Economics and Finance.
    10. Jihui Chen & Maochao Xu, 2015. "Asymmetry and revenue in second-price auctions: a majorization approach," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(3), pages 625-640, July.
    11. Timothy Hubbard & René Kirkegaard & Harry Paarsch, 2013. "Using Economic Theory to Guide Numerical Analysis: Solving for Equilibria in Models of Asymmetric First-Price Auctions," Computational Economics, Springer;Society for Computational Economics, vol. 42(2), pages 241-266, August.
    12. Cole, Matthew T. & Davies, Ronald B. & Kaplan, Todd, 2017. "Protection in government procurement auctions," Journal of International Economics, Elsevier, vol. 106(C), pages 134-142.
    13. Rosa, Benjamin V., 2020. "Affirmative action subcontracting regulations in dynamic procurement auctions," International Journal of Industrial Organization, Elsevier, vol. 72(C).
    14. Mares, Vlad & Swinkels, Jeroen M., 2011. "Near-optimality of second price mechanisms in a class of asymmetric auctions," Games and Economic Behavior, Elsevier, vol. 72(1), pages 218-241, May.
    15. Benjamin V. Rosa, 2019. "Resident Bid Preference, Affiliation, and Procurement Competition: Evidence from New Mexico," Journal of Industrial Economics, Wiley Blackwell, vol. 67(2), pages 161-208, June.
    16. Rahul Deb & Mallesh Pai, 2013. "Symmetric Auctions," Working Papers tecipa-486, University of Toronto, Department of Economics.
    17. Kirkegaard, René, 2009. "Asymmetric first price auctions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1617-1635, July.
    18. Andrew Schotter & Allan Corns, 1999. "Can Affirmative Action Be Cost Effective? An Experimental Examination of Price-Preference Auctions," American Economic Review, American Economic Association, vol. 89(1), pages 291-305, March.
    19. Chiappinelli, Olga & Seres, Gyula, 2024. "Optimal discounts in green public procurement," Economics Letters, Elsevier, vol. 238(C).
    20. Timothy P. Hubbard & Harry J. Paarsch, 2012. "On the Numerical Solution of Equilibria in Auction Models with Asymmetries within the Private-Values Paradigm," Carlo Alberto Notebooks 291, Collegio Carlo Alberto.

    More about this item

    Keywords

    Procurement; Information revelation; Discriminatory policy; Asymmetric auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:883-886. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.