Capacity Games with Supply Function Competition

Procurement Auctions with Capacity Reservation It frequently happens that a supplier needs to invest in building capacity prior supplying product. Then the buyer will need reserve from suppliers and pay for this advance of knowing final demand. “Capacity Games Supply Function Competition” by Edward Anderson, Bo Chen, Lusheng Shao studies very general version problem, which both production costs are volume dependent. They explore how an auction operate setting allow supply function bids suppliers. apply framework newsvendor problem unreliable suppliers, portfolio procurement options spot market, bundling nonsubstitutable products. This helps understand when we may expect make reservation choice maximizes overall chain profit. The key these results is show optimal profit submodular set