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on Contract Theory and Applications |
| By: | Clarissa Lotti; Arieda Muço; Giancarlo Spagnolo; Tommaso Valletti; Tommaso M. Valletti |
| Abstract: | Centralization of public procurement can lower prices for the government’s direct purchase of goods and services. This paper focuses on indirect savings. Public administrations that do not procure directly through a central procurement agency might benefit from the availability of centrally-procured goods. We exploit the introduction of a central purchasing agency in Italy and find that prices came down by 22% among administrations that bought autonomously. These indirect effects appear to be driven by informational externalities, especially for less competent public buyers purchasing technologically more complex goods. Accounting for indirect savings increases the estimate of direct ones. |
| Keywords: | centralization, informational externalities, procurement, public contracts |
| JEL: | D44 H11 H57 H83 L38 L88 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10274&r=cta |
| By: | Silano, Filippo |
| Abstract: | Easing their access to capital markets, governments have been establishing a primary dealer system. Via bilateral self-enforcing agreements ('dealerships'), government debt management units (DMUs) have been appointing national and global banks (the 'dealers') to actively participate in government securities auctions and/or enhance liquidity in the secondary market. The partnership's non-binding and long-run nature makes dealerships relational contracts. Developing a theoretical framework, this study examines the DMU-dealer principal-agent relationship, with the overarching purpose of identifying and mitigating agency costs. Apart from monitoring costs, the article argues that the partnership entails institutional room for public-private collusion. Although the practice would help fostering the partnership's longevity, it could trigger negative externalities. Mitigating potential risks, policy proposals advocate to enhance: (i) monitoring of the dealers' behaviour in fixed income markets, and (ii) transparency in the DMU's governance of industry's benefits. |
| Keywords: | public finance, government debt management, relational contracts, agency costs, dealers |
| JEL: | H63 K12 L14 L51 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:69&r=cta |
| By: | Richard Ruble; Dimitrios Zormpas |
| Abstract: | We study how overlapping ownership affects the timing and size of capacity investments in duopoly. In addition to standard accommodation and delay strategies, internalization allows a leader to block follower entry. Follower timing and capacity reactions are less aggressive, making outcomes less competitive ex-post. Positional competition is more intense, and entry occurs earlier in equilibrium. Internalization raises a leader's incentive to delay follower entry rather than accommodate, and we show with an example that this strategic shift can benefit consumers. |
| Keywords: | ownership, cross-ownership, dynamic competition, Stackelberg leadership, strategic capacity investment |
| JEL: | D25 G32 L13 |
| Date: | 2022–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:2201&r=cta |
| By: | Konstantinos Charistos; Ioannis Pinopoulos; Panagiotis Skartados |
| Abstract: | We examine the effects of (passive) cross-holdings in the downstream market on the sustainability of upstream collusion. We consider two competing vertical chains with downstream Cournot and homogeneous goods. Each downstream firm holds a (symmetric) non-controlling share of its rival. |
| Keywords: | competing vertical chains; cross-holdings; passive ownership; tacit collusion |
| JEL: | D43 L13 L40 L81 |
| Date: | 2023–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:2303&r=cta |