A BUREAUCRAT'S PROCUREMENT STRATEGY: BUDGET CONSTRAINTS AND RATIONING
We investigate a bureaucratic principal responsible for the procurement of goods and services from private agents. The bureaucrat is evaluated on output and controlled by a limited budget. The agents maximize profit, have private information about variable production costs, and have positive outside options which are lost upon acceptance of a procurement contract. The setting is relevant for, e.g. governmental agencies. We show how this setup makes probabilistic rationing and overproduction for low-cost agents a useful tool for the bureaucrat. Copyright 2007 The Authors Journal compilation © CIRIEC 2007.
Year of publication: |
2007
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Authors: | ANTHON, Signe ; BOGETOFT, Peter ; THORSEN, Bo Jellesmark |
Published in: |
Annals of Public and Cooperative Economics. - Wiley Blackwell. - Vol. 78.2007, 2, p. 221-244
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Publisher: |
Wiley Blackwell |
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