Wholesale price auction

The Impact of Supplier Competition— The Wholesale Price Auction... 

We first consider a wholesale price auction. In a wholesale price auction, the buyer announces his purchase quantity, choosing his retail price before he knows supplier bids. The buyer has to use his expectation of supplier costs while making the quantity decision. Each supplier has to post wholesale prices in response, and the buyer merely picks his best option. Though suppliers do not know each other s bids because an auction is used, the resulting wholesale price is max(r,r2). For the suppliers to be competitive, their cost s has to be lower than the wholesale prices that each of them would offer the buyer if they were by themselves, i.e., each... 

While an auction typically serves as a price-determination mechanism, Jin and Wu (2001a) show that it also could serve as a coordination mechanism for the supply chain. Analyzing different auction schemes under both complete and asymmetric information assumptions in a two-supplier one-buyer framework, they demonstrate that different forms of auction and market mechanisms change the nature of supplier competition, thus the buyer-supplier interaction. In a wholesale price auction, the buyer announces the quantity Q and the two suppliers bid wholesale prices to maximize expected profits. In a catalog auc-... 

But what if there were two suppliers, each competing to win the contract. Suppose the two suppliers have produaion costs of r, and s, with a> 2> s. Consider a system in which the suppliers first compete on wholesale price, and the buyer chooses the appropriate retail price and quantity. F the two suppliers participated in an auction, then the wholesale price charged to the buyer would be Si- This wholesale price is always smaller than the best that can... 

Wholesale Price and Catalog Auctions under Information Asymmetry... 

However, under a catalog auction, the retailer gets to adjust the purchase quantity in response to the wholesale prices obtained. Thus, the suppliers first compete on wholesale price, and the winning price is 2-... 

---