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on Contract Theory and Applications |
| By: | Lluis Bru; Daniel Cardona; Jozef Sakovics |
| Abstract: | We study how a buyer unable to price discriminate should satisfy his demand in the presence of diseconomies of scale in production. Defying the Coase Conjecture, we show that auctioning contracts for lots (block sourcing) followed by setting a price to realize (part of) the residual gains from trade a ways leads to higher buyer surplus than simply setting a price. |
| Keywords: | block sourcing, lot auction, monopoly, procurement, residual market, split awards |
| JEL: | D42 D44 L12 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:291&r=all |
| By: | Zachary Schaller (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine) |
| Abstract: | We examine settings—such as litigation, labor relations, or arming and war -- in which players first make non-contractible up-front investments to improve their bargaining position and gain advantage for possible future conflict. Bargaining is efficient ex post, but we show that a player may prefer Conflict ex ante if there are sufficient asymmetries in strength. There are two sources of this finding. First, up-front investments are more dissimilar between players under Con- flict, and they are lower than under Bargaining when one player is much stronger than the other. Second, the probability of the stronger player winning in Conflict is higher than the share received under Nash bargaining. We thus provide a rationale for conflict to occur under complete information that does not depend on long-term commitment problems. Greater balance in institutional support for different sides is more likely to maintain peace and settlements. |
| Keywords: | Power asymmetries; War; Litigation; Contests |
| JEL: | C70 D74 J53 K41 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:181909&r=all |
| By: | Simon Porcher (IAE - Institut d'Administration des Entreprises) |
| Abstract: | This article looks at the reasons for and results of contracting out in local public services, with specific regards to its possible effects on price and other performance determinants. It uses a rich city-level dataset of water public services in France between 1998 and 2008. We find evidence, using alternative econometric methods, that contracting out to private operators is associated with higher prices on average ceteris paribus. This pattern is consistent with the study of units switching from an organizational form to another. We finally discuss several reasons for the existing price gap between direct management (public management) and contracting out (private management) using the expense-preferences of managers. |
| Keywords: | public-private partnerships,water,efficiency,differences-in-differences,Propensity score matching |
| Date: | 2019–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02145863&r=all |