Sequential Procurement Auctions and Their Effect on Investment Decisions PDF Download
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Languages : en
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Author:
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Author: Parente, Diane H.
Publisher: IGI Global
ISBN: 1599046385
Category : Education
Languages : en
Pages : 402
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Book Description
Offers a systematic approach to the examination of online procurement auctions. Growth in online auctions reinforces the need for understanding the factors important in auctions and the caveats that both researchers and practitioners need to know in order to effectively study and use the auction tool.
Author: Zhuoxiu Zhang
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages :
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Book Description
This dissertation examines an iterative multi-attribute auction for multi-unit procurement in the first part. A multi-unit allocation problem that allows order split among suppliers is formulated to improve the market efficiency. Suppliers are allowed to provide discriminative prices over units based on their marginal costs. A mechanism called Iterative Multiple-attribute Multiple-unit Reverse Auction (IMMRA) is proposed based on the assumption of the modified myopic best-response strategies. Numerical experiment results show that the IMMRA achieves market efficiency in most instances. The inefficiency occurs occasionally on the special cases when cost structures are significantly different among suppliers. Numerical results also show that the IMMRA results in lower buyer payments than the Vickrey-Clarke-Grove (VCG) payments in most cases. In the second part, two sequential auctions with the Vickrey-Clarke-Grove (VCG) mechanism are proposed for two buyers to purchase multiple units of an identical item. The invited suppliers are assumed to have capacity constraints of providing the required demands. Three research problems are raised for the analysis of the sequential auctions: the suppliers' expected payoff functions, the suppliers' bidding strategies in the first auction, and the buyers' procurement costs. Because of the intrinsic complexity of the problems, we limit our study to a duopoly market environment with two suppliers. Both suppliers' dominant bidding strategies are theoretically derived. With numerical experiments, suppliers' expected profits and buyers' expected procurement costs are empirically analyzed.
Author: Leandro Arozamena
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 56
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Author: Bing Han
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Category :
Languages : en
Pages :
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This dissertation consists of three studies about product quality and sequential auctions. The first study develops a model of product differentiation in which firms strategically compete in product quality and advertising intensity. Products exhibit a combination of vertical and horizontal differentiation. Consumers' utility has a stochastic relationship with quality, and consumers are more likely to prefer a higher quality good. Consumers face a trade-off between higher quality goods and price. Increased competition leads to less advertising, but may result in higher or lower quality products offered in the market.
Author: Alex Scott
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
Heterogeneous bidding behavior by firms in business-to-business procurement auctions has recently been observed in contexts as wide-ranging as Dutch flower auctions and auctions for secondhand goods. But there has yet to be an empirical examination of what types of firms behave in which ways. We study a longitudinal dataset of spot auctions in which we observe exogenously-imposed business constraints on the bidding firms - some firms can perform work only using assets that they own and operate, while others must outsource work - i.e., brokers. These business constraints manifest themselves in strikingly different behavior by the bidding firms. Brokers bid often and with relatively high prices, while firms who operate assets bid infrequently, with low prices, and are highly affected by capacity constraints. The two types of firms have different response mechanisms in sequential auctions. Brokers adjust their prices in subsequent auctions based on whether they won or lost the previous auction, while firms who operate assets decide whether or not to place a bid. We examine other sources of heterogeneity and discuss implications for our focal industry.
Author: Luca Corazzini
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
We experimentally study bidding behavior in sequential first-price procurement auctions where bidders' capacity constraints are private information. Treatment differs in the ex-ante probability distribution of sellers' capacities and in the (exogenous) probability that the second auction is actually implemented. Our results show that: (i) bidding behavior in the second auction conforms with sequential rationality; (ii) while first auction's bids negatively depend on capacity, bidders seem unable to recognize this link when, at the end of the first auction, they state their beliefs on the opponent's capacity. To rationalize this inconsistency between bids and beliefs, we conjecture that bidding in the first auction is also affected by a hidden, behavioral type - related to the strategic sophistication of bidders - that obfuscates the link between capacity and bids. Building on this intuition, we show that a simple level-k model may help explain the inconsistency.
Author: Paul Milgrom
Publisher: Cambridge University Press
ISBN: 1139449168
Category : Business & Economics
Languages : en
Pages : 378
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Book Description
This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.
Author: Viplav Saini
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We utilize laboratory experiments to study behavior in sequential procurement auctions where winning an auction round increases a bidder's future costs. The game admits competitive as well as bid-rotation style collusive equilibria. We find that (a) bidders show some propensity to account for the opportunity cost of winning an auction, but underestimate its magnitude; (b) revealing all bids (instead of only the winning bid) after each round leads to dramatically higher procurement costs. The rise in procurement costs is accompanied by an increase in very high (extreme) bids, a fraction of which appear to be collusive in nature.
Author: Fang Zhong
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages :
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Book Description
While there is an ever increasing adoption of e-sourcing, where a buyer auctions off procurement contracts to a small group of pre-qualified suppliers, there is a lack of understanding of the impact of dynamic bidding process on procurement outcomes and bidding behavior. To extend the knowledge of this important issue, in this thesis, we explore empirically the value of online procurement auction on cost reduction, quality management, and winner selection from the buyer's perspective. We also explore how incumbent status affects the procurement outcomes. From suppliers' perspective, we characterize their bidding behavior and examine the effect of incumbent status on bidding. First, we collect detailed auction and contract awarding data for manufacturing goods during 2002-2004 from a large buyer in the high-tech industry. The rich data set enables us to apply statistical model based cluster technique to uncover heterogeneous bidding behavior of industry participants. The distribution of the bidding patterns varies between incumbent and non-incumbent suppliers. We also find that the buyer bias towards the incumbent suppliers by awarding them procurement contracts more often and with a price premium. Next, focusing on recurring auctions, we find that suppliers bid adaptively. The adaptive bidding is affected by the rank of suppliers' final bids. Finally, with field data of procurement auction for legal services, we demonstrate that service prices are on average reduced after dynamic bidding events. Most interestingly, the cost savings are achieved without the sacrifice of quality. Incumbent winners' quality is higher, on average, than the quality of buyer's supplier base before the auctions, while non-incumbent winner's quality is lower. These findings imply that the main value of online procurement auctions for business services comes from incumbents in the form of reduced price and enhanced quality. We find that after adjusting for incumbents' higher quality, incumbent bias disappears. Our results also imply that the buyer might possess important information about the incumbents, through past experiences, that cannot be easily included in the buyer's scoring function due to uncodifiability.
