I study the interaction between optimal procurement and outsourcing of production in small industries. First, two … sellers decide about outsourcing. By outsourcing, a seller loses information about the costs of producing to his supplier …. Then the buyer designs the procurement mechanism and sellers who outsourced production subcontract with their respective …

. We perform a counterfactual experiment on Italian government procurement auctions: we compute the gain that the …Adverse selection in procurement arises when low-cost bidders are also lowquality suppliers. We propose a mechanism … procurement mechanism. …

We investigate equilibrium bidding in first-price auctions with asymmetric reserve prices. For example, the auctioneer …