Common-Value Procurement Auctions with Renegotiation


This note contains the equilibrium bid functions for two types of common-value procurement auctions: 1) a procurement auction in which bids represent an enforceable contract; 2) a procurement auction in which, upon learning the true cost of supplying the good, the winning bidder can renegotiate the contract with the buyer, and each bidder must submit a bond with their bid, which is returned at the end of the auction unless they are the low bidder and renegotiate the contract.

Share and Cite:

Baltaduonis, R. and Rentschler, L. (2014) Common-Value Procurement Auctions with Renegotiation. Theoretical Economics Letters, 4, 619-622. doi: 10.4236/tel.2014.48078.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] Milgrom, P.R. and Weber, R.J. (1982) A Theory of Auctions and Competitive Bidding. Econometrica, 50, 1089-1122.
[2] Guasch, J.L., Laffont, J.J. and Straub, S. (2008) Renegotiation of Concession Contracts in Latin America: Evidence from the Water and Transport Sectors. International Journal of Industrial Organization, 26, 421-442.
[3] Wang, R. (2000) Bidding and Renegotiation in Procurement Auctions. European Economic Review, 44, 1577-1597.
[4] Roelofs, M.R. (2002) Common Value Auctions with Default: An Experimental Approach. Experimental Economics, 5, 233-252.
[5] Kagel, J.H. and Levin, D. (2002) Common Value Auctions and the Winner’s Curse. Princeton University Press, New Jersey.

Copyright © 2023 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.