We analyze first-price equilibrium bidding behavior of capacity-constrained firms in a sequence of two procurement auctions.
In the model, firms with a cost advantage in completing the project auctioned off at the end of the sequence may enter the
unfavored first auction hoping to lose it. Equilibrium bidding in both auctions deviates from the standard Symmetric Independent
Private Value auction model due to opportunity costs of bidding created by possibly employed capacity. For this sequential
auction model with non-identical objects, we show that revenue equivalence applies.
We thank Werner Güth and Ulf Schiller for helpful comments and stimulating discussions. The paper greatly benefited from very
helpful comments of the associate editor and two reviewers. We gratefully acknowledge comments from Jeannette Brosig, Veronika
Grimm, Alfred Luhmer, Barbara Schöndube-Pirchegger, Gerhard Schwödiauer, and audiences at Erfurt, Frankfurt, Fribourg, Heidelberg,
Leuven, Maastricht, Magdeburg, Marseille, Mannheim, Munich, and Swansea.