Munich Personal RePEc Archive

Competition for procurement shares

Alcalde, Jose and Dahm, Matthias (2011): Competition for procurement shares.

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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 payoffs are strictly positive. (ii) The mechanism allows to vary the extent to which affirmative action objectives, like promoting local industries, are pursued. (iii) Surprisingly, even accomplishing affirmative action goals, procurement expenditures might be lower than under a classical auction format.

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