Common-Value Procurement Auctions with Renegotiation

Rimvydas Baltaduonis¹, Lucas Rentschler²

¹Gettysburg College, Gettysburg, USA.
²Universidad Fransisco Marroquín, Guatemala City, Guatemala.

DOI: 10.4236/tel.[phone]                

Abstract

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.

Keywords

Procurement Auctions, Renegotiation, Bidding, Equilibrium

Conflicts of Interest

The authors declare no conflicts of interest.

References

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