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| Author: | Lyon, T.P. |
| Title: | Does dual sourcing lower procurement costs |
| Journal: | Journal of Industrial Economics
2006 : JUN, VOL. 54:2, p. 223-252 |
| Index terms: | defence public expenditure USA |
| Freeterms: | dual sourcing procurement costs |
| Language: | eng |
| Abstract: | US defence policy encourages the use of dual sourcing to reduce government procurement costs, but recent theoretical studies arise doubts about the benefits of this policy. This study considers the determinants of dual sourcing and its effects on government procurement costs using a panel dataset of tactical missiles. Dual sourcing is found not to be driven by failures to reduce costs, but instead, it is used more often after incumbent suppliers demonstrate quality control problems, and in settings where tacit collusion is likely to be difficult. |
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