Public Sector Procurement: Lump-Sum Payments or Optimal Contracts?
نویسندگان
چکیده
In a dynamic setting, we compare procurement schemes in the form of a lump-sum payment with an optimal information-revealing menu of contracts without commitment. We nd that lump-sum contracts generate two bene ts. First, they always provide optimal levels of e ort. Second, they `tie the hands' of the procurer, and avoid the ratchet e ect. These bene ts must be weighed against the costs of higher rent in the second period. For a low discount factor such costs dominate, but for a high discount rate, when the ratchet e ect becomes acute, the welfare gap becomes small and lump-sum payments may even welfare-dominate an optimal menu. JEL Classi cation: L51
منابع مشابه
Optimization Driven Approaches for Subsidy Allocation and Supply Chain Procurement
This thesis introduces several new models in operations management, that are motivated by practical settings. It studies these models in an optimization-driven approach, employing mathematical programming techniques to derive important structural and algorithmic insights on the corresponding problems. In the first part of the thesis, we study subsidy allocation problems under budget constraints...
متن کاملFarm-level Production Effects
In theory, lump-sum transfers are a way to redistribute wealth without distorting production decisions. Recent agricultural policy reforms are an unusual large-scale application of this concept. The 1996 Federal Agricultural Improvement and Reform (FAIR) Act removed most price-contingent agricultural subsidies and replaced them with Production Flexibility Contracts—lump-sum payments with few ti...
متن کاملTHE CENTRE FOR MARKET AND PUBLIC ORGANISATION Centre for Market and Public Organisation
Building upon Iossa and Martimort (2008), we study the main incentive issues and the form of optimal contracts for Public Private Partnerships (PPPs) in transports. We present a basic model of procurement in a multitask environment in which a risk-averse firm chooses unobservable efforts in infrastructure and service quality. We begin by analyzing the effect on incentives and risk transfer of b...
متن کاملExplain the optimal pattern in the contracts of public private Participation construction, exploitation and transfer (BOT) Applied to Contracts Theory
In recent decade in developing countries, lack of government budget or lack of access to modern technology, persuade governments to attract private sector participation in the economy. One of the most common methods is Public-Private Partnership agreements. The real implementation of this type of partnership needs to set contracts that satisfies preferences of both parties. This research aims t...
متن کاملOPTIMAL CATEGORICAL TRANSFER PAYMENTS: THE WELFARE ECONOMICS OF LIMITED LUMP-SUM REDISTRIBUTION A central component of most countries' tax-transfer systems
Most actual tax-transfer systems include categorical transfer payments, based on(nearly) exogenous characteristics such as disability or date of birth. In this paper, I note thatoptimal categorical transfers are a form of limited lump-sum redistribution and analyze optimalcategorical transfers in relation to the theory of first-best lump-sum redistribution. I examine theeffects ...
متن کامل