2020
DOI: 10.1016/j.ijindorg.2020.102657
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Affirmative action subcontracting regulations in dynamic procurement auctions

Abstract: I study affirmative action subcontracting regulations in a model where governments use auctions to repeatedly procure goods and services at the lowest possible price. Through using disadvantaged subcontractors, prime contractors build relationships over time, resulting in lower subcontracting costs in future periods. I find that regulation in the form of a minimum subcontracting requirement expands bidder asymmetries, favoring prime contractors with stronger relationships over those with weaker ones. Simulatio… Show more

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Cited by 4 publications
(2 citation statements)
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“…Policymakers play a pivotal role in pooling tenders and avoiding monopsony practices among vendors (Miller and Lehoux, 2020). The incentive to form a partnership with disadvantaged partners is quite challenging for policymakers because this partnership may pose a high risk for the principles (Rosa, 2020).…”
Section: Dynamic Capabilitymentioning
confidence: 99%
“…Policymakers play a pivotal role in pooling tenders and avoiding monopsony practices among vendors (Miller and Lehoux, 2020). The incentive to form a partnership with disadvantaged partners is quite challenging for policymakers because this partnership may pose a high risk for the principles (Rosa, 2020).…”
Section: Dynamic Capabilitymentioning
confidence: 99%
“…Given m k symmetric lots, the optimal quantity Z auctioned o¤ satis…es the …rst-order condition 19 @P C (Z; Y; m k ; m 1 ) @Z = c 0 Z km k c 0 (q) qc 00 (q)…”
Section: Appendixmentioning
confidence: 99%