TITLE:
Common-Value Procurement Auctions with Renegotiation
AUTHORS:
Rimvydas Baltaduonis, Lucas Rentschler
KEYWORDS:
Procurement Auctions, Renegotiation, Bidding, Equilibrium
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.8,
October
7,
2014
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.