Journal ArticleDOI
Second sourcing and the experience curve: price competition in defense procurement
James J. Anton,Dennis A. Yao +1 more
TLDR
In this paper, the authors examine a dynamic model of price competition in defense procurement that incorporates the experience curve, asymmetric cost information, and the availability of a higher cost alternative system, and characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information.Abstract:
We examine a dynamic model ofprice competition in defense procurement that incorporates the experience curve, asymmetric cost information, and the availability of a higher cost alternative system. We model acquisition as a two-stage process in which initial production is governed by a contract between the government and the developer. Competition is then introduced by an auction in which a second source bids against the developer for remaining production. We characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information. When high costs are revealed, these contracts result in a credible cutoff of new system production in favor of the still higher cost alternative system.read more
Citations
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Benefiting from Innovation: Value Creation, Value Appropriation and the Role of Industry Architectures
TL;DR: In this article, the authors consider how innovators benefit from value appropriation and creation, and they provide an integrative guide that explains how firms should manage their position along the value chain to capture returns from innovation, thus extending and qualifying Teece's original predictions and prescriptions.
Journal ArticleDOI
Benefiting from innovation: Value creation, value appropriation and the role of industry architectures
TL;DR: In this article, the authors consider how innovators benefit from value appropriation and creation, and they provide an integrative guide that explains how firms should manage their position along the value chain to capture returns from innovation.
Journal ArticleDOI
The efficiency of incomplete contracts: an empirical analysis of air force engine procurement
TL;DR: In this article, the authors examine the incentives of contractual parties to design agreements that are left intentionally incomplete with regard to future duties or contingencies, and conclude that the degree of contractual incompleteness chosen in practice reflects a desire by the parties to minimize the economic costs associated with contractual exchange.
Book ChapterDOI
Recent developments in the theory of regulation
TL;DR: In this paper, the authors review recent theoretical work on the design of regulatory policy, focusing on the complications that arise when regulated suppliers have better information about the regulated industry than do regulators.
Posted Content
Regulation, Competition and Liberalization
TL;DR: The authors examines the complexities involved in the liberalization process and distinguishes liberalization policies that generally are procompetitive from corresponding anti-competitive policies, while stressing the importance of case-specific analyses.
References
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Journal ArticleDOI
Regulating a monopolist with unknown costs
David P. Baron,Roger B. Myerson +1 more
TL;DR: In this paper, the authors consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator, and derive an optimal regulatory policy for the case in which the regulator does not know the costs of the firm.
Journal ArticleDOI
The Learning Curve and Competition
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Journal ArticleDOI
The dynamics of incentive contracts
Jean-Jacques Laffont,Jean Tirole +1 more
TL;DR: In this paper, a simple two-period principal/agent model is studied, where the principal updates the incentive scheme after observing the agent's first-period performance. But the agent has superior information about his ability, and the strategies are required to be perfect, and updating of the principal's beliefs about the agents ability follows Bayes' rule.
Journal ArticleDOI
Limited Liability Contracts between Principal and Agent
TL;DR: In this article, the optimal strategy of the principal is examined in an environment where there are (ex post ) limitations on the maximum penalty that can be imposed on a risk-neutral agent.
Journal ArticleDOI
The value of information in a sealed-bid auction
Paul Milgrom,Robert J. Weber +1 more
TL;DR: In this article, the authors explore bidders' incentives to gather information in auctions, when there is one bidder with only public information and another with some private information, and find that the bidder with private information generally makes positive profits while the informed bidder's profits rise when he gathers extra information.