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Contracting with Qualified Suppliers

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Author Info
Riordan, Michael H

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Abstract

In an extension of the Laffont-Tirole model, a buyer fully qualifies a set of suppliers ex ante and awards production to the most efficient ex post. The buyer's incomplete information about production costs biases ex ante market structure in favor of a greater number of qualified suppliers. Further extensions that allow product differentiation and learning-by-doing suggest explanations for split production awards and less than fully qualified suppliers. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 37 (1996)
Issue (Month): 1 (February)
Pages: 115-28
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Handle: RePEc:ier:iecrev:v:37:y:1996:i:1:p:115-28

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  2. Rachel E. Kranton & Deborah F. Minehart, 2001. "A Theory of Buyer-Seller Networks," American Economic Review, American Economic Association, vol. 91(3), pages 485-508, June. [Downloadable!] (restricted)
  3. Yongmin Chen & Ruqu Wang, 2005. "Market Design with Correlated Valuations," Working Papers 1034, Queen's University, Department of Economics. [Downloadable!]
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  4. Kerschbamer, Rudolf & Tournas, Yanni, 2000. "In-House Competition, Organizational Slack and the Business Cycle," CEPR Discussion Papers 2557, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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