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Bayesian implementation and rent extraction in a multi-dimensional procurement problem

Title data

Herweg, Fabian ; Schmidt, Klaus M.:
Bayesian implementation and rent extraction in a multi-dimensional procurement problem.
In: International Journal of Industrial Organization. (8 July 2019) .
ISSN 0167-7187
DOI: https://doi.org/10.1016/j.ijindorg.2019.06.003

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Abstract in another language

We consider a multi-dimensional procurement problem in which sellers have private information about their costs and about a possible design flaw. The information about the design flaw is necessarily correlated. We solve for the Bayesian procurement mechanism that implements the efficient allocation at the lowest cost under the constraint that sellers are protected by limited liability. We show that the rents obtained from reporting costs truthfully can be used to reduce the rents sellers must get for reporting the flaw. We compare the efficient Bayesian mechanism to the efficient ex post incentive compatible mechanism studied by Herweg and Schmidt (2019) that is informationally less demanding.

Further data

Item Type: Article in a journal
Refereed: Yes
Additional notes: In Press, Corrected Proof
Keywords: Auction; Correlated types; Inefficient renegotiation; Multidimensional screening; Procurement
Subject classification: JEL classification: D44;D47;D82;H57
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VIII: International Competition Policy > Chair Economics VIII: International Competition Policy - Univ.-Prof. Dr. Fabian Herweg
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences
300 Social sciences > 330 Economics
Date Deposited: 03 Dec 2019 08:38
Last Modified: 03 Dec 2019 08:38
URI: https://eref.uni-bayreuth.de/id/eprint/53462