Bös, Dieter - University of Bonn, Germany - 1996
Target-cost pricing has been a widely applied formula in defence contracting. If this type of pricing arrangement is …-reimbursement properties of target-cost pricing work against a first best. However, since costs are verifiable, the ex-- ante contract allows … first best. The paper shows that the positive properties of target-cost pricing outweigh the negative ones: it is possible …