Beating Coase at Monopoly

Lluis Bru, Daniel Cardona, Jozsef Sakovics

Research output: Working paperDiscussion paper

Abstract

We study how a buyer unable to price discriminate should satisfy his demand in
the presence of diseconomies of scale in production. Defying the Coase Conjecture,
we show that auctioning contracts for lots (block sourcing) followed by setting a
price to realize (part of) the residual gains from trade always leads to higher buyer
surplus than simply setting a price.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages21
Volume291
Publication statusPublished - 11 Jun 2019

Keywords

  • block sourcing
  • lot auction
  • monopoly
  • procurement
  • residual market
  • split awards
  • D42
  • D44
  • L12

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