| This research focuses on the procurement auctions. Instead of linear bidder valuations that are typically assumed in the auction theory literature, we are interested in generalized U-Shaped valuation functions that express the trade-off between two inter-connecting factors. The most obvious example is the interaction between cost and capacity. A supplier's cost structure may face economies (and/or diseconomies) of scale depending on the order quantity as related to her available capacity. Under the U-Shaped valuation assumption; we conduct competitive equilibrium analysis for different classes of procurement auctions and derive all key properties such as incentive compatibility, individual rationality, and ex-post efficiency using the classical framework devised by Myerson.; We initiate our study on a single-period procurement auction in order to derive the capacitated suppliers' equilibrium bidding strategies under the symmetric incomplete information setting, relying heavily on the use of Bayesian probability. The single period analysis provides the foundation necessary for more complex analysis. We expand the single-period game to a two-stage sequential (repeated) game, and we provide in-depth analysis for the impact of inter-stage informational updates on the equilibrium bidding strategies.; The ultimate benefit of our research is to offer a concise analytical tool that models multi-attribute auctions, where the generalized valuation function captures trade-offs between the primary attribute (price) and the secondary attributes such as quality, delivery performance and service level.; We also advance our study to multi-channel auctions so that the buyer can separate, for instance, high-cost high-quality suppliers for essential components from low-cost suppliers, allowing them to compete in different markets. The model we have developed allow us to set up distinctive channels in such a way that, in equilibrium, different "types" of suppliers will find it most beneficial to compete in the channel that is designed for their particular profile. This addresses an important issue in procurement auction where industrial buyers are often reluctant to set up auctions for the fear of reducing all supplier competition to price wars, driving away high-quality suppliers. |
