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How to subcontract?

Author

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  • Wambach, Achim

Abstract

Firms compete for a contract and subcontract part of the work. If subcontracting takes place before the award of the contract, the revenue equivalence result breaks down, as subcontractors anticipate that their bids influence the probability of the firm winning the contract. Properties of the optimal subcontracting mechanism are discussed.

Suggested Citation

  • Wambach, Achim, 2009. "How to subcontract?," Economics Letters, Elsevier, vol. 105(2), pages 152-155, November.
  • Handle: RePEc:eee:ecolet:v:105:y:2009:i:2:p:152-155
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    References listed on IDEAS

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    1. Marechal, Francois & Morand, Pierre-Henri, 2003. "Pre vs. post-award subcontracting plans in procurement bidding," Economics Letters, Elsevier, vol. 81(1), pages 23-30, October.
    2. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    3. Morton I. Kamien & Lode Li & Dov Samet, 1989. "Bertrand Competition with Subcontracting," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 553-567, Winter.
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    Cited by:

    1. Xu, Jiayan & Feng, Yinbo & He, Wen, 2017. "Procurement auctions with ex post cooperation between capacity constrained bidders," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1164-1174.

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