Fondazione GRINS
Growing Resilient,
Inclusive and Sustainable
Galleria Ugo Bassi 1, 40121, Bologna, IT
C.F/P.IVA 91451720378
Finanziato dal Piano Nazionale di Ripresa e Resilienza (PNRR), Missione 4 (Infrastruttura e ricerca), Componente 2 (Dalla Ricerca all’Impresa), Investimento 1.3 (Partnership Estese), Tematica 9 (Sostenibilità economica e finanziaria di sistemi e territori).



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This note studies the optimal demand commitment in a uniform-price procurement auction, within the class of linear schedules.
When the auctioneer (which is the buyer) can commit ex ante to the slope of demand, the equilibrium is a Pareto improvement relative to the simultaneous benchmark.
This is because the sellers’ slope choice generates positive externalities on the buyer, so when committing, the buyer has incentives to choose a steeper slope.
As a result, commitment mitigates the supply reduction due to market power: the equilibrium has both a higher price and higher quantity, so that both the buyer and the sellers are strictly better off.
KEYWORDS
AKNOWLEDGEMENTS
This study was funded by the European Union - NextGenerationEU, in the framework of the GRINS - Growing Resilient, INclusive and Sustainable project (GRINS PE00000018). The views and opinions expressed are solely those of the authors and do not necessarily reflect those of the European Union, nor can the European Union be held responsible for them.
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