A manufacturer has just launched a second-price sealed-bid procurement auction to identify the lowest cost supplier for a key component. The manufacturer does not know what bids to expect, but assumes that the prices per component that reflect the valuations of the suppliers are private, independent, and uniformly distributed between $100 and $200. (Note that this can be thought of as there being a common “base price” of $100 that no supplier will go below with individual valuations that range between 0-100 on top of this base price).
The manufacturer expects 15 suppliers to place bids before the closing date of the auction. What is the expected final price per component?