Competitive Procurement and Asset Specificity
CentER Discussion Paper No. 2003-96
50 Pages Posted: 16 Jun 2004
Date Written: 2003
Abstract
This paper studies the effects of asset specificity on the performance of procurement auctions with subcontracting and asset sales. The analysis highlights the role of several asset features like transfer costs, type of alternative uses and maintenance requirements. It is argued that, if bargaining over subcontracting or asset sales is efficient enough, then the presence of durable specific assets per se does not have decisive effects on the competitive pressure from potential entrants.
Keywords: Competitiveness, transaction costs, franchising, monopoly, regulations, auctions, Markov processes, general equilibrium, asset specificity
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