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Reputation and collusion in procurement (2006)
| Citations: | 6 - 0 self |
BibTeX
@MISC{Calzolari06reputationand,
author = {Giacomo Calzolari and Giancarlo Spagnolo and G. Calzolari and G. Spagnolo},
title = {Reputation and collusion in procurement},
year = {2006}
}
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Abstract
When gains from trade exist both along contractible and non-contractible dimensions and procurement is repeated, non-contractible gains from trade can be realized through reputa-tion/relational contracting. A buyer may restrict participation to his recurrent auctions to a subset of potential sellers and threaten replacement of sellers that perform poorly along non-contractible dimensions. In such a dynamic procurement framework, keeping the optimal num-ber of eligible sellers endogenous, we find that: a) there is a general trade-off between reputa-tion for quality and collusion: shorter contracts- more frequent re-auctioning- and restricted participation facilitate non-contractible quality provision, but also collusive agreements among suppliers; and b) when non-contractible quality and variability in suppliers ’ efficiency are both important, short contract duration and a collusive agreement between a few eligible sellers may maximize welfare and leave the buyer better off. JEL Classification Numbers:...
Keyphrases
non-contractible dimension collusive agreement eligible seller dynamic procurement framework general trade-off short contract duration optimal num-ber recurrent auction frequent re-auctioning jel classification number non-contractible gain reputa-tion relational contracting supplier efficiency non-contractible quality threaten replacement potential seller
