The Strategic Revelation of Reservation Pricein Procurement Auction

The reservation price rules in auction aim to prevent the too low(too high in procurement auction) transaction price and protect the profit of the auctioneer.The goal of the paper is to find whether the purchaser should reveal the reservation price in order to reduce the procurement cost.In the first sealed auction and the second sealed auction,when the reservation price is announced and hidden,we respectively developed the bidding strategies of the suppliers and the procurement cost of the purchaser which was compared under the assumption that the costs of the suppliers are uniformly distributed.The result shows that the purchaser should keep the reservation price secret unless the reservation price is small.Compared with the second sealed bid auction,the first sealed bid auction is always a better choice for the purchaser.