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Author: | Piccione, M. Tan, G. |
Title: | Cost-reducing investment, optimal procurement and implementation by auctions |
Journal: | International Economic Review
1996 : AUG, VOL. 37:3, p. 663-686 |
Index terms: | INTERNATIONAL ECONOMICS INVESTMENT |
Language: | eng |
Abstract: | The authors analyse a model in which potential suppliers invest in research and development (R&D) and then compete for a procurement contract from a buyer. If the buyer is able to commit to a procurement mechanism before the investment stage, the full-information solution can be uniquely implemented by first-price and second price sealed-bid auction mechanisms when the R&D technology exhibits decreasing returns to scale. If the procurement mechanisms and the levels of investment are chosen simultaneously, the full-information solution can not be implemented. |
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