We study how funding agencies should set budget caps for competitive grants. We show that budget caps influence the researchers' submission strategy and, in particular, whether they steer their project choice towards the agencies' favorite projects, and the level of funds they request. The...

Abstract: We discuss public procurement instruments for acquiring innovation, focusing on the European Pre-commercial Procurement, Procurement of Innovative Solutions and Innovation Partnerships. We analyse in particular how firms' innovation incentives are affected by: (i) economies of scope...

The procurement of an innovation involves motivating a research effort to generate a new idea and then implementing that idea efficiently. If research efforts are unverifiable and implementation costs are private information, a trade-off arises between the two objectives. The optimal mechanism...

In a public procurement setting, we discuss the desirability of completing contracts with state-contingent clauses providing for monetary compensations to the contractor when revenue shocks occur. Realized shocks are private information of the contractor and this creates agency costs of...

In a public procurement setting, we discuss the desirability of completing contracts with state-contingent clauses providing for monetary compensations to the contractor when revenue shocks occur. Realized shocks are private information of the contractor and this creates agency costs of...

PPPs have been implemented broadly around the world in the infrastructure sector - water and sanitation, transports, energy and telecommunications - and, more recently, in the provision of public services -­ education, health, prisons, and water and waste management. Key aspects of the contract...

We review international practice in concession-based public private partnerships (PPPs) for highways, in the light of the economic theory of incentives, procurement and regulation. In particular, we analyse alternative funding mechanisms to cover highway costs, and their impact on demand risk...

Does a more competent public bureaucracy contribute to better economic outcomes? We address this question in the context of the US federal procurement of services and works by combining contract-level data on procurement performance and bureau-level data on competence and workforce...

We build on the existing literature in Public Private Partnerships (PPP) to analyze the main incentive issues in PPPs and the shape of optimal contracts in those contexts. We present a basic model of procurement in a multi-task environment in which a risk averse fi rm chooses non-contractible e...