Auctions Versus Negotiations in Procurement: An Empirical Analysis

Should the buyer of a customized good use competitive bidding or negotiation to select a contractor? To shed light on this question, we offer a framework that compares auctions with negotiations. We then examine a comprehensive data set of private sector building contracts awarded in Northern California during the years 1995-2000. The analysis suggests a number of potential limitations to the use of auctions. Auctions perform poorly when projects are complex, contractual design is incomplete and there are few available bidders. Furthermore, auctions stifle communication between buyers and the sellers, preventing the buyer from utilizing the contractor's expertise when designing the project. Some implications of these results for procurement in the public sector are discussed.

U.S.-Japan and U.S.-China trade conflict : export growth, reciprocity, and the international trading system

First Japan and more recently China have pursued export-oriented growth strategies. While other Asian countries have done likewise, Japan and China are of particular interest because their economies are so large and the size of the associated bilateral trade imbalances with the United States so conspicuous. In this paper the authors focus on U.S. efforts to restore the reciprocal GATT/WTO market-access bargain in the face of such large imbalances and the significant spillovers to the international trading system. The paper highlights similarities and differences in the two cases. The authors describe U.S. attempts to reduce the bilateral imbalances through targeted trade policies intended to slow growth of U.S. imports from these countries or increase growth of U.S. exports to them. They then examine how these trade policy responses, as well as U.S. efforts to address what were perceived as underlying causes of the imbalances, influenced the evolution of the international trading system. Finally, the authors compare the macroeconomic conditions associated with the bilateral trade imbalances and their implications for the conclusions of the two episodes.Free Trade,Trade Law,Economic Theory&Research,Trade Policy,Currencies and Exchange Rates

The Role of Auctions in Allocating Public Resources

This paper provides an economic framework within which to consider the effectiveness and limitations of auction markets. The paper looks at the use of auctions as a policy instrument and the effects of auction design on consumer interests, the efficient allocation of resources, and industry competitiveness.Australia; Research; Ascending-bid auction; Auctions; Bidders; Conservation funds; Descending-bid auction; Dutch auction; English auction; Environmental Management; First-price sealed-bid auction; Infrastructure; Markets; Oral auction; Outcry auction; Pollutant emission permits; Power supply contracts; Public resources; Radio- spectrum; Second-price sealed-bid auction Spectrum licences; Vickrey auction; Water rights;

Introducing Competition in the French Electricity Supply Industry: The Destabilisation of a Public Hierarchy in an Open Institutional Environment

The French electricity supply industry is characterized by a vertically integrated monopoly and public ownership and when the government introduced market rules, it was with the aim of preserving the integration of the public incumbent as a national champion. This had two paradoxical effects in favour of competition development and the building of safeguards for entrants

Designing a Compensated–Kidney Donation System

Osteochondral lesions of the talus (OLTs) are the third most common type of osteochondral lesion and can cause pain and instability of the ankle joint. Episurf Medical AB is a medical technology company that develops individualized implants for patients who are suffering from focal cartilage lesions. Episurf have recently started a project that aims to implement their implantation technique in the treatment of OLTs. This master thesis was a part of Episurf’s talus project and the main goal of the thesis was to find the optimal implantation angle of the Episurf implant when treating OLTs. The optimal implantation angle was defined as the angle that minimized the maximum equivalent (von Mises) strain acting on the implant shaft during the stance phase of a normal gait cycle. It is desirable to minimize the strain acting on the implant shaft, since a reduction of the strain can improve the longevity of the implant. To find the optimal implantation angle a finite element model of an ankle joint treated with the Episurf implant was developed. In the model an implant with a diameter of 12 millimeters was placed in the middle part of the medial side of the talar dome. An optimization algorithm was designed to find the implantation angle, which minimized the maximum equivalent strain acting on the implant shaft. The optimal implantation angle was found to be a sagittal angle of 12.5 degrees and a coronal angle of 0 degrees. Both the magnitude and the direction of the force applied to the ankle joint in the simulated stance phase seemed to influence the maximum equivalent strain acting on the implant shaft. A number of simplifications have been done in the simulation of this project, which might affect the accuracy of the results. Therefore it is recommended that further, more detailed, simulations based on this project are performed in order to improve the result accuracy.Fokala broskskador på talusbenet är den tredje vanligaste typen av fokala broskskador och kan ge upphov till smärta och instabilitet av fotleden. Episurf Medical AB är ett medicintekniskt företag som utvecklar individanpassade implantat för patienter med fokala broskskador. Episurf har nyligen påbörjat ett projekt där deras teknik ska användas i behandlingen av fokala broskskador på talusbenet. Den här masteruppsatsen var en del i Episurfs talusprojekt och dess huvudmål var att finna den optimala implantationsvinkeln av Episurfs implantat i behandlingen av fokala broskskador på talusbenet. Den optimala implanteringsvinkeln definierades som den vinkel som minimerade den effektiva von Mises-töjningen som verkade på implantatskaftet under stance-fasen i en normal gångcykel. Det är eftersträvansvärt att minimera belastningen på implantatskaftet eftersom en reducering av belastningen kan förbättra implantatets livslängd. En finita element-modell av en fotled behandlad med Episurfs implantat utvecklades för att för att finna den optimala implantationsvinkeln. I modellen placerades ett implantat med en diameter på 12 millimeter på mittendelen av talus mediala sida. En optimeringsalgoritm utformades för att finna implantationsvinkeln som minimerade den effektiva von Mises-töjningen på implantatskaftet. Den funna optimala implantationsvinkeln bestod av en vinkel på 12.5 grader i sagittalplan och en vinkel på 0 grader i koronalplan. Både storleken och riktningen på kraften som applicerats på fotleden under den simulerade stance-fasen av gångcykeln verkade påverka belastningen på implantatskaftet. Ett antal förenklingar har gjorts i projektets simuleringar, vilket kan påverka noggrannheten i resultatet. Därför rekommenderas att ytterligare, mer detaljerade simuleringar baserade på det här projektet görs för att förbättra resultatets noggrannhet

Transparency, financial accounting information, and corporate governance

Audited financial statements along with supporting disclosures form the foundation of the firm-specific information set available to investors and regulators. In this article, the authors discuss economics-based research focused on the properties of accounting systems and the surrounding institutional environment important to effective governance of firms. They provide a framework for understanding the operation of accounting information in an economy, discuss a broad range of important research findings, present a conceptual framework for characterizing and measuring corporate transparency at the country level, and isolate a number of future research possibilities.Corporations - Accounting ; Stockholders ; Corporate governance

Does binding or feedback influence myopic loss aversion : an experimental analysis

Empirical research has shown that a lower feedback frequency combined with a longer bind-ing period decreases myopia and thereby increases the willingness to invest into a risky asset. In an experimental study, we disentangle the intertwined manipulation of feedback frequency and binding period to analyze how both variables alone contribute to the change in myopia and how they interact. We find a strong effect for the length of commitment, a much less pro-nounced effect for the feedback frequency, and a strong interaction between both variables. The results have important implications for real world intertemporal decision making

Perverse Reverse Price Competition: Average Wholesale Prices and Medicaid Pharmaceutical Spending

Generic drugs comprise an increasing share of total prescriptions dispensed in the U.S., rising from nearly 50% in 1999 to 75% in 2009. The generic drug market has typically been viewed at the wholesale level as a competitive market with price approaching marginal costs. However, the large presence of third party payers as final purchasers may distort prices at the retail level relative to what a standard model of price competition would predict. In this paper, we investigate how generic drug producers compete in the presence of the procurement rules of the Medicaid program. Medicaid reimbursement to pharmacies, like that of other payers, is based on a benchmark price called the average wholesale price (AWP). The AWP is reported by generic producers themselves, and until recently has been subject to essentially no independent verification. As a result, generic producers have had an incentive to compete for pharmacy market share by reporting AWPs that exceed actual average wholesale prices, as this “spread” leads to larger pharmacy profits. In 2000, after a federal government audit of actual wholesale prices of generic products, states were advised to reduce Medicaid reimbursement by as much as 95% for about 400 generic and off-patent drug products. We use variation induced by the timing of this policy along with its differential impact on drug products\u27 Medicaid reimbursement to estimate the impact of this exogenous price change on the market share of targeted products. Our findings indicate that pharmacies did respond to the perverse incentives of the Medicaid program by dispensing products with the highest AWPs. Overall, the Medicaid market share fell by about 45% for targeted drug products as a result of the policy

Achieving food security in a cost effective way

"This study evaluates the domestic and international trade and marketing policies in India and analyzes the effects of deregulating domestic markets and liberalizing external trade on the food grain sector. Historically, India's food policy has involved heavy government intervention in all aspects of the food grain market pricing, procurement, stocking, transport and marketing. The Food Corporation of India (FCI) is the principal parastatal agency responsible for marketing food grains within the country and controls nearly 50 percent of the grain markets. An analysis of the performance of the FCI, however, reveals enormous and mounting costs of operations that present a huge financial burden for the Government of India (GOI). This study offers a comparison of the costs and functioning of the FCI with that of private traders, in order to suggest policy options for reform. The results show that private traders operate at costs lower than those incurred by the FCI in both storage and trade, despite several controls and restrictions imposed upon them. Therefore, the finding from this study is that there is a strong case for reform from the efficiency point of view." From Author's Executive Summary