Centralized vs. Decentralized Procurement: Does Dispersed Information Call for Decentralized Decision-Making
AbstractShould the government procure equipment for its agencies or let them run their own procurement auctions? Suppose the agency has private information about product quality, but is inclined to favor local suppliers. Decentralization saves bureaucracy and "agency costs" (costs tied to truthful revelation of quality information), but leads to biased decisions (a discriminatory auction). I show that the costs accociated with discrimination may increase when the quality differences increase.
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Bibliographic InfoPaper provided by Department of Economics, University of Bergen in its series Norway; Department of Economics, University of Bergen with number 1497.
Length: 15 pages
Date of creation: 1997
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway
Web page: http://www.uib.no/econ/
More information through EDIRC
INCENTIVES ; CONTRACTS ; AUCTIONS ; DISCRIMINATION;
Other versions of this item:
- Vagstad, Steinar, 2000. "Centralized vs. decentralized procurement: Does dispersed information call for decentralized decision-making?," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 949-963, August.
- Vagstad, S., 2000. "Centralized vs. Decentralized procurement: does Dispersed Information Call for Decentralized Decision-Making?," Norway; Department of Economics, University of Bergen 211, Department of Economics, University of Bergen.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
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