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Contracting with Qualified Suppliers

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  • Riordan, Michael H

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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Bibliographic 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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Cited by:
  1. Kerschbamer, Rudolf & Tournas, Yanni, 2003. "In-house competition, organizational slack, and the business cycle," European Economic Review, Elsevier, vol. 47(3), pages 505-520, June.
  2. Eckhard Janeba, 2000. "Tax Competition When Governments Lack Commitment: Excess Capacity as a Countervailing Threat," American Economic Review, American Economic Association, vol. 90(5), pages 1508-1519, December.
  3. James J. Anton & Sandro Brusco & Giuseppe Lopomo, 2010. "Split-Award Procurement Auctions with Uncertain Scale Economies: Theory and Data," Working Papers 10-32, Duke University, Department of Economics.
  4. 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.
  5. Mark Armstrong & David Sappington, 2005. "Regulation, Competition and Liberalization," Industrial Organization 0505011, EconWPA, revised 07 Oct 2005.
  6. Yongmin Chen & Ruqu Wang, 2005. "Market Design with Correlated Valuations," Working Papers 1034, Queen's University, Department of Economics.
  7. Kerschbamer, Rudolf & Tournas, Yanni, 2000. "In-House Competition, Organizational Slack and the Business Cycle," CEPR Discussion Papers 2557, C.E.P.R. Discussion Papers.
  8. Yim, Andrew, 2010. "Quality Cost and Failure Risk in the Choice of Single versus Multiple Sourcing," MPRA Paper 27858, University Library of Munich, Germany.
  9. James J. Anton & Sandro Brusco & Giuseppe Lopomo, 2007. "Coordination in Split-Award Auctions with Uncertain Scale Economies: Theory and Data," Department of Economics Working Papers 07-02, Stony Brook University, Department of Economics.

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