There Are Three Suppliers Competing in a Competitive Procurement, Each

Multiple Choice

There are three suppliers competing in a competitive procurement, each with independently-drawn costs. Each firm's cost is in the range, $300,000-$400,000, with all costs in this range considered equally likely. Here, b1= sealed bid amount of firm 1 and c1= firm 1's costs (Both in $ thousand) . Then, firm 1's optimum equilibrium strategy is:

A) b₁ = c₁.
B) b₁ = (.5) (300,000) + .5c₁.
C) b₁ = (.5) (400,000) + .5c₁.
D) b₁ = (1/3) (300,000) + (2/3) c₁.
E) b₁ = (1/3) (400,000) + (2/3) c₁.