eprintid: 15020
rev_number: 8
eprint_status: archive
userid: 1482
importid: 105
dir: disk0/00/01/50/20
datestamp: 2014-07-09 17:08:42
lastmod: 2021-10-27 13:36:39
status_changed: 2014-07-09 17:08:42
type: monograph
metadata_visibility: show
creators_name: Barbosa, Klenio
creators_idrefppn: 185143733
title: Free Riding in Procurement Design
ispublished: pub
subjects: subjects_ECO
abstract: 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.
date: 2009-12
date_type: published
publisher: TSE Working Paper
official_url: http://tse-fr.eu/pub/22251
faculty: tse
divisions: tse
keywords: free-riding
keywords: procurement
keywords: multibuyers
language: en
has_fulltext: TRUE
subjectsJEL: JEL_H57
subjectsJEL: JEL_L24
view_date_year: 2009
full_text_status: public
monograph_type: working_paper
series: TSE Working Paper
volume: 09-128
book_title: TSE Working Paper
oai_identifier: oai:tse-fr.eu:22251
harvester_local_overwrite: oai_set
harvester_local_overwrite: faculty
harvester_local_overwrite: site
harvester_local_overwrite: creators_idrefppn
oai_lastmod: 2015-07-31T18:00:02Z
oai_set: tse
oai_set: ut1c
site: ut1
citation:   Barbosa, Klenio <https://www.idref.fr/185143733>  (2009) Free Riding in Procurement Design.  TSE Working Paper, n. 09-128     
document_url: https://publications.ut-capitole.fr/id/eprint/15020/1/wp_env_128_2009.pdf