Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper deals with the problem of design specification in public procurement and provides a rationale for design misspecification. We propose a model in which the sponsor decides...

When procurement takes place in the presence of horizontally differentiated contractors, the design of the object being procured affects the resulting degree of competition. This paper highlights the interaction between the optimal procurement mechanism and the design choice. Contrary to...

This paper analyzes the problem of abnormally low tenders in the procurement process. Limited liability causes firms in a bad financial situation to bid more aggressively than good firms in the procurement auction. Therefore, it is more likely that the winning firm is a firm in financial...

Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper deals with the problem of design speciffication in public procurement and provides a rationale for design misspeciffication. We propose a model in which the sponsor...

Latin America participated in the electric revolution which profoundly transformed the most developed Western economies between 1880 and 1930. The electrification of Latin America began relatively soon after these economies, but it was incapable of keeping up with them. Public electric lighting...

How much information does an auctioneer want bidders to have in a private value environment? We address this question using a novel approach to ordering information structures based on the property that in private value settings more information leads to a more disperse distribution of buyers’...

This article analyses the allocation of prizes in contests. While existing models consider a single contest with an exogenously given set of players, in our model several contests compete for participants. As a consequence, prizes not only induce incentive effects but also participation effects....

This paper studies sequential auctions of licences to operate in a market where those firms that obtain at least one licence then engage in a symmetric market game. I employ a new refinement of Nash equilibrium, the concept of {\sl Markovian recursively undominated equilibrium}. The unique...

Economics is the science of want and scarcity. We show that want and scarcity, operating within a simple exchange institution (double auction), are sufficient for an economy consisting of multiple inter--related markets to attain competitive equilibrium (CE). We generalize Gode and Sunder's...

We develop a stylized model of horizontal and vertical competition in tournaments with two competing firms. The sponsor cares about the quality of the design but also about the design location. A priori not even the sponsor knows his preferred design location, which is only discovered once he...