Optimal sequential auctions

Sequential sealed first-price and open descending-price procurement-auctions are studied. We examine which procurement-auction rule achieves the low procurement cost. We show that the answer to this policy question depends on whether the items are complements or substitutes. With substitutes, the first-price procurement-auction is preferred, while with complements, the open descending-price procurement-auction is preferred. We also illustrate the procurement cost minimizing auction and the auction rule preferred by the bidders. With substitutes, bidders prefer the open descending-price procurement-auction, while with complements bidders prefer the first-price procurement-auction