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Author: | Anthon, S. Bogetoft, P. Thorsen, B.J. |
Title: | Socially optimal procurement with tight budgets and rationing |
Journal: | Journal of Public Economics
2007 : AUG, VOL. 91:7-8, p. 1625-1642 |
Index terms: | models social costs fixed costs budgetary control taxation public sector |
Freeterms: | procurement stochastic rationing |
Language: | eng |
Abstract: | This paper explores the behaviour of a social planner that secures the supply of a good, e.g. an environmental benefit, through contracting with private agents. Among others, it is found that budget constraints and fixed costs change the optimal contract design in more than one way: the social planner minimizes costs, rations high cost contracts to reduce fixed costs and information rents, and distorts contracts for all agent types, including low-cost agents etc. |
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