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The government wants some new hospitals built to certain specifications. They competitively tender the work in the following way: interested firms are asked to submit

  1. The government wants some new hospitals built to certain specifications. They competitively tender the work in the following way: interested firms are asked to submit bids (one bid per firm). The lowest bid wins the contract, and the government will pay the winning firm their bid in return for the building of the hospitals. Carefully explain how the firms should bid in the private-value case and the common-value case. Write down any assumptions you make.

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