For the procurement of complex goods the early exchange of information is important to avoid costly renegotiation. If …). Bilateral negotiations are superior if potential design improvements are important, if renegotiation is particularly costly, and …

inefficiencies: inefficient renegotiation, inefficient production and inefficient design. We derive the welfare optimal direct …

are more pronounced for a fancy than a standard design, it is optimal to fix the standard design ex ante. If renegotiation …