Suchergebnisse

AbstractMany firms invent and design products while outsourcing their production to independent contractors. We consider a dominant strategy mechanism that selects a contractor using a reverse auction, combined with a menu of permitted change orders from which the contractor can choose after updated cost information has become available. That mechanism maximizes the gain from trade, allows the firm to extract the second highest surplus, and induces the contractor to make efficient adjustments to output after updated cost information has emerged.

Millions of citizens and firms lack access to high speed internet, even though governments pledged to spend huge sums of money to subsidize internet networks. In this paper we review some systematic flaws of present subsidy policies and outline a promising alternative. We propose that governments should treat the broadband infrastructure as a public responsibility and set up intelligently designed public-private partnerships that fund and temporarily operate the broadband in exchange for collecting service fees and, if necessary, subsidies. Simple "least-present value of revenue" auctions should be used to award all concessions, not only those that require subsidies, and concessions should flexibly revert to public ownership depending on realized revenues. This procurement method is easy to use, immune to strategic manipulations and renegotiations, and has already proven successful in procuring toll-roads and bridges.

The literature on research and development contests implicitly assumes that contestants submit their innovation regardless of its value. This ignores a potential adverse selection problem. The present article analyzes the procurement of innovations when the procurer cannot commit himself to never bargain with innovators who bypass the contest. We compare fixed‐prize tournaments with and without entry fees, and optimal scoring auctions with and without minimum score requirement. Our main result is that preventing bypass is more costly in the optimal auction, and the optimal fixed‐prize tournament is more profitable than the optimal auction.

We reconsider the justifications of the R&D subsidies of Spencer and Brander (1983), by allowing firms to form a research joint venture (RJV) and license innovations. If governments offer unconditional subsidies, an RJV is formed and the strategic benefits of R&D subsidies vanish. Nevertheless, governments subsidize their domestic firms to enhance their bargaining position in the joint venture subgame. If governments offer subsidies conditional on forming resp. not forming an RJV, the game has multiple equilibria: one that restores the Spencer and Brander result, and another in which governments induce the formation of an RJV by a combination of conditional taxes and subsidies.

We reconsider the justifications of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to pool R&D investments and license innovations. In equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the subsequent oligopoly game. Nevertheless, governments subsidize their domestic firms in order to raise their bargaining position in the joint venture. This holds true regardless of whether governments offer either unconditional or conditional subsidies. This suggests an alternative explanation of the observed proliferation of R&D subsidies.

This paper reconsiders the explanation of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to license their innovations and to pool their R&D investments. We show that in equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the export oligopoly game. Nevertheless, national governments are driven to subsidize their own national firms in order to increase their strength in the joint venture bargaining game. Therefore, our analysis suggests an alternative explanation of the observed proliferation of R&D subsidies.