Transparency in common-value procurement auctions with resale: the effect of information disclosure

In procurement auctions, the presence of resale markets and information disclosure policies significantly shapes bidding strategies and auction outcomes. This study explores the strategic effects of resale opportunities and post-auction disclosure of common-value information in first-price procurement auctions under asymmetric information. Employing a game-theoretic model, we analyse how bidders adapt strategies across varied informational environments. Our findings indicate that resale opportunities consistently enhance the auctioneer's expected benefits. However, the optimal disclosure policy hinges on informational asymmetry levels: disclosing the common-value component benefits markets with lower asymmetry, while withholding it is preferable in highly asymmetric settings. Notably, increasing bidder competition outperforms resale in boosting auctioneer benefits, highlighting competition's crucial role in auction design. These insights offer actionable guidance for managers and policymakers in crafting effective procurement auctions, particularly in sectors like construction and services where resale and information asymmetry are prevalent, advancing both theoretical and practical dimensions of operations management.