Multidimensional supplier bidding and bargaining
We consider a situation where a set of suppliers with asymmetric costs bid on price and non-price attributes (e.g., quality variables) in a scoring auction to win an indivisible contract from the buyer. Only one supplier will be selected. We first investigate the bidding process in the commitment case, i.e., the bidding outcome will be implemented immediately and there would be no negotiation after the bidding. We consider uncertainty on scores, uncertainty on attribute weights, combined uncertainty on scores and weights, and uncertainty on competitors' costs in the bidding process. By studying the equilibrium decisions of the buyer and suppliers, we will answer the following questions in the commitment case: How should a potential supplier choose the price and non-price attributes in his/her bid? What is the effect of each type of uncertainty on the buyer and suppliers' equilibrium behavior? How would information revelation by each player affect the outcome and in particular the amount of pro t made by the suppliers? Then we consider the no-commitment case where the buyer would initiate a negotiation with one or more suppliers after the bidding. We are interested in how a bilateral multidimensional bargaining or a multilateral multidimensional bargaining as the second stage would affect the bidding strategies at the first stage.
- Supplier Bidding
- Supplier Contracting