Topic
Cost reduction
About: Cost reduction is a research topic. Over the lifetime, 5224 publications have been published within this topic receiving 73925 citations. The topic is also known as: cost-reduction & cost-saving.
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TL;DR: In this paper, the authors systematically analyze the mechanism involved in each of the following channels of potential revenue increase or cost reduction owing to better environmental practices: (a) better access to certain markets; (b) differentiating products; (c) selling pollution-control technology; (d) risk management and relations with external stakeholders; (e) cost of material, energy, and services; (f)cost of cap...
Abstract: Executive Overview The conventional wisdom concerning environmental protection is that it comes at an additional cost imposed on firms, which may erode their global competitiveness. However, during the last decade, this paradigm has been challenged by a number of analysts (e.g., Porter & van der Linde, 1995), who have argued basically that improving a company' environmental performance can lead to better economic or financial performance, and not necessarily to an increase in cost. The aim of this paper is to review empirical evidence of improvement in both environmental and economic or financial performance. We systematically analyze the mechanism involved in each of the following channels of potential revenue increase or cost reduction owing to better environmental practices: (a) better access to certain markets; (b) differentiating products; (c) selling pollution-control technology; (d) risk management and relations with external stakeholders; (e) cost of material, energy, and services; (f) cost of cap...
1,409 citations
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TL;DR: In this paper, the authors developed a model in which the provider can invest in improving the quality of service or reducing the cost of providing a service in order to improve the quality or reduce the cost.
Abstract: When should a government provide a service inhouse and when should it contract out provision? We develop a model in which the provider can invest in improving the quality of service or reducing cost. If contracts are incomplete, the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee. However, the private contractor's incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on non-contractible quality. The model is applied to understanding the costs and benefits of prison privatization.
1,382 citations
TL;DR: In this article, the authors developed a model in which the provider can invest in improving the quality of service or reducing cost, and applied it to understand the costs and benefits of prison privatization, and found that if contracts are incomplete, the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee.
Abstract: When should a government provide a service in-house, and when should it contract out provision? We develop a model in which the provider can invest in improving the quality of service or reducing cost. If contracts are incomplete, the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee has. However, the private contractor's incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on noncontractible quality. The model is applied to understanding the costs and benefits of prison privatization.
1,366 citations
TL;DR: In this article, the authors emphasize the use of accounting data in regulatory or procurement contracts when the supplier has superior information about the cost of the project and invests in cost reduction, and the main result states that, under risk neutrality, the supplier announces an expected cost and is given an incentive contract linear in cost overruns.
Abstract: The paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier (1) has superior information about the cost of the project and (2) invests in cost reduction. The main result states that, under risk neutrality, the supplier announces an expected cost and is given an incentive contract linear in cost overruns. This (optimal) contract moves toward a fixed-price contract as the announced cost decreases. An investment choice is then introduced and the use of a rate-of-return regulation is studied.
1,278 citations
TL;DR: In this paper, the authors proposed a mechanism in which the price the regulated firm receives depends on the costs of identical firms, and in equilibrium each firm chooses a socially efficient level of cost reduction.
Abstract: In the typical regulatory scheme a franchised monopoly has little incentive to reduce costs. This article proposes a mechanism in which the price the regulatedfirm receives depends on the costs of identical firms. In equilibrium each firm chooses a socially efficient level of cost reduction. The mechanism generalizes to cover heterogeneous firms with observable differences. Medicare's prospective reimbursement of hospitals by using diagnostically related groups is a scheme very similar to the one outlined here.
1,271 citations