relation: https://publications.ut-capitole.fr/id/eprint/15020/
title: Free Riding in Procurement Design
creator: Barbosa, Klenio
subject: B- ECONOMIE ET FINANCE
description: Low-powered contracts do not provide proper incentives to reduce cost; still empirical studies show that they are quite pervasive in public and private procurement. This paper argues that low-powered contracts arise due to a free-riding problem when the contractor enjoys economies of scale/scope working for different buyers. A buyer, offering a procurement contract to the contractor, does not fully internalize that higher-powered incentives provide cost reduction in the contractor's activities, benefiting other buyers. As a result, buyers offer lower-powered contracts than what would be designed by cooperative buyers. Strikingly, the higher the contractor's benefits from economies of scope/scale are, the lower the power of the procurement contracts will be. In addition, laws which force buyers to award fixed-price contracts can be welfare-enhancing.
publisher: TSE Working Paper
date: 2009-12
type: Monograph
type: NonPeerReviewed
format: text
language: en
identifier: https://publications.ut-capitole.fr/id/eprint/15020/1/wp_env_128_2009.pdf
identifier:   Barbosa, Klenio <https://www.idref.fr/185143733>  (2009) Free Riding in Procurement Design.  TSE Working Paper, n. 09-128     
relation: http://tse-fr.eu/pub/22251
language: en