IDEAS home Printed from
   My bibliography  Save this article

Dual Sourcing in Repeated Procurement Competitions


  • Dorothy E. Klotz

    (Graduate School of Business Administration, Fordham University, 113 West 60th Street, New York, New York 10023)

  • Kalyan Chatterjee

    (Smeal College of Business Administration, The Pennsylvania State University, 309 Beam Business Administration Building, University Park, Pennsylvania 16802)


The issue of maintaining competition over time in a repeated procurement setting is important for both government and private sector buyers. The U.S. Department of Defense has experimented with splitting production quantities between two or more contractors in an effort to make government business more attractive for the private sector. This paper analyzes the effectiveness of this strategy. We find that in a two-period model with production learning and entry costs, dual sourcing, even for the specific mechanism we consider, in some cases, reduces overall expected cost. Moreover, if buyers are unable to commit to long-term contracts or suppliers are unable to bid away anticipated gains, the incentives to dual source are often stronger.

Suggested Citation

  • Dorothy E. Klotz & Kalyan Chatterjee, 1995. "Dual Sourcing in Repeated Procurement Competitions," Management Science, INFORMS, vol. 41(8), pages 1317-1327, August.
  • Handle: RePEc:inm:ormnsc:v:41:y:1995:i:8:p:1317-1327

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Cuihong Li & Laurens G. Debo, 2009. "Second Sourcing vs. Sole Sourcing with Capacity Investment and Asymmetric Information," Manufacturing & Service Operations Management, INFORMS, vol. 11(3), pages 448-470, July.
    2. Minner, Stefan, 2003. "Multiple-supplier inventory models in supply chain management: A review," International Journal of Production Economics, Elsevier, vol. 81(1), pages 265-279, January.
    3. Anton, James J. & Brusco, Sandro & Lopomo, Giuseppe, 2010. "Split-award procurement auctions with uncertain scale economies: Theory and data," Games and Economic Behavior, Elsevier, vol. 69(1), pages 24-41, May.
    4. Alejandro Francetich, 2013. "Becoming the Neighbor Bidder: Endogenous Winner’s Curse in Dynamic Mechanisms," Working Papers 501, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    5. Gurnani, Haresh & Ray, Tridip, 2003. "A Procurement Auction Model Under Supplier Uncertainty," MPRA Paper 9990, University Library of Munich, Germany.
    6. Andrei Yakovlev & Oleg Vyglovsky & Olga Demidova & Alexander Bashlyk, 2015. "Incentives For Repeated Contracts In Public Sector: Empirical Study Of Gasoline Procurement In Russia," HSE Working papers WP BRP 24/PA/2015, National Research University Higher School of Economics.
    7. Jain, Tarun & Hazra, Jishnu, 2017. "Dual sourcing under suppliers' capacity investments," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 103-115.
    8. Wedad J. Elmaghraby, 2000. "Supply Contract Competition and Sourcing Policies," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 350-371, April.
    9. Heese, H. Sebastian, 2015. "Single versus multiple sourcing and the evolution of bargaining positions," Omega, Elsevier, vol. 54(C), pages 125-133.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:41:y:1995:i:8:p:1317-1327. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.