Auctions for Procuring Options

We examine the mechanism design problem for a single buyer to procure purchase-options for a homogeneous good when that buyer is required to satisfy an unknown future demand. Suppliers have 2-dimensional types in the form of commitment costs and production costs. The efficient schedule of options depends on the distribution of demand. To implement an efficient outcome, we introduce a class of mechanisms which are essentially pivotal mechanisms (Vickrey--Clarke--Groves) with respect to the expected costs of the suppliers. We show that the computational task of running such mechanisms is not burdensome. Our discussion uses electricity markets as an example.