SMEs and public procurement policy
AbstractIn this paper, we characterize an optimal procurement policy as a mechanism design problem when an allotment of the contract is available, i.e., when a government faces both SMEs and large firms for carrying out a heterogeneously divisible project. Our model allows us to analyze all procurement policies (set-asides, favoritism, non-discriminatory rules), taking into account both efficiency and distributive arguments and derive a normative framework. We show that set-asides are not generally optimal, whatever the industrial preferences of the government are, while the optimal preferential treatments of firms implies complex non-linear rules. We prove that the optimal policy can be implemented using a modified Vickrey-type auction. We also consider that the firms can reduce their cost by a non observable effort, and exhibit the specific impact of cost reduction incentives on the optimal policies. Copyright Springer-Verlag Berlin/Heidelberg 2003
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Bibliographic InfoArticle provided by Springer in its journal Review Economic Design.
Volume (Year): 8 (2003)
Issue (Month): 3 (October)
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Web page: http://link.springer.de/link/service/journals/10058/index.htm
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- Edquist , Charles & Zabala-Iturriagagoitia , Jon Mikel, 2012. "Why Pre-Commercial Procurement is notInnovation Procurement," CIRCLE Electronic Working Papers 2012/11, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
- François MARÉCHAL & Pierre-Henri MORAND, 2004. "What Allotment and Subcontracting in Procurement Bidding," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 04.06, Université de Lausanne, Faculté des HEC, DEEP.
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