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Economic Incentives and the Defense Procurement Process

  • William P. Rogerson
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    This paper descrives some of the insights that the economic theory of incentives can contribute to defense procurment policy analysis. It descrives the underlying incentive problems that shape the defense procurement problem, the nature of current institutions and how they affect actors' behavior, and possible directions for improving the procurement process suggested by viewing it as a solution to a complex set of incentive problems. Incentive problems between government and defense firms and incentive problems within government are both considered.

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    Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1078.

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    Date of creation: Dec 1993
    Date of revision:
    Handle: RePEc:nwu:cmsems:1078
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    1. Kovacic, William E, 1991. "Commitment in Regulation: Defense Contracting and Extensions to Price Caps," Journal of Regulatory Economics, Springer, vol. 3(3), pages 219-40, September.
    2. Frank R. Lichtenberg, 1988. "Government Subsidies to Private Military R&D Investment: DOD's IR&D Policy," NBER Working Papers 2745, National Bureau of Economic Research, Inc.
    3. Kirk Monteverde & David J. Teece, 1982. "Supplier Switching Costs and Vertical Integration in the Automobile Industry," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 206-213, Spring.
    4. Keith J. Crocker & Kenneth J. Reynolds, 1993. "The Efficiency of Incomplete Contracts: An Empirical Analysis of Air Force Engine Procurement," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 126-146, Spring.
    5. Tirole, Jean, 1986. "Procurement and Renegotiation," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 235-59, April.
    6. Rogerson, William P, 1989. "Profit Regulation of Defense Contractors and Prizes for Innovation," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1284-1305, December.
    7. Michael H. Riordan & David E.M. Sappington, 1989. "Second Sourcing," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 41-58, Spring.
    8. Victor P. Goldberg, 1976. "Regulation and Administered Contracts," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 426-448, Autumn.
    9. Rogerson, William P, 1990. "Quality vs. Quantity in Military Procurement," American Economic Review, American Economic Association, vol. 80(1), pages 83-92, March.
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