Abhatoo - Centre Nationale de Documentation

Buyers engaged in procurement can face substantially di¤erentiated sellers. The need to balance pricing concerns and preferences leads to the use of handicapping rules, whereby preferred sellers enjoy a formal advantage in the procurement rules. Given the prevalence of such mechanisms it is of substantial practical and theoretical importance to understand and rank the outcomes of di¤erent mechanisms. This paper analyzes first price auctions with concave handicapping rules, which are the most common means of skewing auction by buyers who have a preferred subset of sellers. We find conditions under which any first price auction with concave handicapping is ex-post dominated by a simple second-price auction design or its open equivalent.