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Small business participation procurement policy: Subcontracting vs Allotment


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  • François Maréchal
  • Pierre-Henri Morand


Allotment and subcontracting are the two procedures enabling small businesses to participate in procurement. We compare these two procedures in the context of a procurement contract awarded by a first-price sealed-bid auction. We assume that the public buyer wishes to fulfil two different goals: to minimize expected costs of the contract for the public buyer and to maximize small businesses? profit. We show that, under specific cost-technology conditions we determine, the allotment procedure not only enables extensive participation by small businesses but also can achieve the goal of minimizing expected total costs for the public buyer. JEL classification: D44; L51.

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Bibliographic Info

Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

Volume (Year): 78 (2012)
Issue (Month): 2 ()
Pages: 5-23

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Handle: RePEc:cai:reldbu:rel_782_0005

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Keywords: small business; auction; procurement;

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Cited by:
  1. Julie Brux & Claudine Desrieux, 2014. "To allot or not to allot public services? An incomplete contract approach," European Journal of Law and Economics, Springer, vol. 37(3), pages 455-476, June.


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