Optimal auctions for multi-unit procurement with volume discount bids

Optimal auctions for multi-unit procurement with volume discount bids

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Article ID: iaor200968960
Country: United Kingdom
Volume: 6
Issue: 1
Start Page Number: 70
End Page Number: 91
Publication Date: May 2009
Journal: International Journal of Operational Research
Authors: , , , , ,
Keywords: discounts, purchasing, auctions
Abstract:

In this paper, we design an optimal procurement mechanism for procuring multiple units of a single homogeneous item based on volume discount bids submitted by rational and intelligent suppliers. We develop an elegant auction mechanism, VD-OPT, that minimises the cost to the buyer, satisfying at the same time: Bayesian Incentive Compatibility (BIC); interim individual rationality.

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