search query: @indexterm incentives / total: 682
reference: 286 / 682
| Author: | Vagstad, S. |
| Title: | Centralized vs. decentralized procurement: Does dispersed information call for decentralized decision-making? |
| Journal: | International Journal of Industrial Organization
2000 : AUG, VOL. 18:6, p. 949-963 |
| Index terms: | Incentives Auctions Discrimination Government purchasing Contracts Bureaucracy Quality control Probability Public sector Models |
| Language: | eng |
| Abstract: | Should the government procure equipment for its agencies or let them run their own procurement auctions? Suppose the agency has private information about product quality, but is inclined to favour local suppliers. Decentralization saves bureaucracy and "agency costs", i.e. costs tied to truthful revelation of quality information, however leading to biased decisions. It is shown that the costs associated with discrimination may increase when the quality differences or the probability that the agency knows the quality increase. Furthermore, this effect may be dominant, implying that increased importance of local information may be an argument for centralization. |
SCIMA