Competition under incomplete contracts and the design of procurement policies
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- dc.contributor.author Carril, Rodrigo
- dc.contributor.author Gonzalez-Lira, Andres
- dc.contributor.author Walker, Michael S.
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:38Z
- dc.date.available 2024-11-14T10:09:38Z
- dc.date.issued 2022-03-01
- dc.date.modified 2024-11-14T10:08:29Z
- dc.description.abstract We study the effects of intensifying competition for contracts in the context of U.S. Defense procurement. Conceptually, opening contracts up to bids by more participants leads to lower awarding prices, but may hinder buyers' control over non-contractible characteristics of prospective contractors. Leveraging a regulation that mandates agencies to publicize certain contract opportunities, we document that expanding the set of bidders reduces award prices, but deteriorates post-award performance, resulting in more cost overruns and delays. To further study the scope of this tension, we develop and estimate a model in which the buyer endogenously chooses the intensity of competition, invited sellers decide on auction participation and bidding, and the winner executes the contract ex-post. Model estimates indicate substantial heterogeneity in ex-post performance across contractors, and show that simple adjustments to the current regulation that account for adverse selection could provide 2 percent of savings in procurement spending, or $104 million annually
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1824
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68564
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1824
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword procurement
- dc.subject.keyword competition
- dc.subject.keyword auctions
- dc.subject.keyword incomplete contracts
- dc.subject.keyword Labour, Public, Development and Health Economics
- dc.title Competition under incomplete contracts and the design of procurement policies
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper