Research on the number of suppliers in split-award auction

摘要

In many procurement practices, the buyer splits his requirement into two contracts and awards them to different suppliers. The primary contract and the secondary contract are awarded sequentially by using second-price auction. There are n suppliers who participate the auction of the primary contract. The existing of the secondary contract can increase m(m ≥ 1) new suppliers of low capacity to participate it. We formulate a model of sequential split-award auction and prove that when m and n satisfied a certain inequation, the expected procurement cost of split-award auctions is less than that of sole-source auction. Further more, the optimal strategy on how to split the contract is discussed to help the buyer benefit more.