Information Expropriation and Moral Hazard in Optimal Second-Source Auctions

Posted: 19 Feb 2014

See all articles by Lars Stole

Lars Stole

University of Chicago - Booth School of Business

Date Written: July 1, 1994

Abstract

Government mandated technology transfers from the developer of a product to a second source offer a potential gain of reduced information rents and procurement costs. To provide appropriate incentives, technology must sometimes be transferred even when the second source is less efficient than the first. Additionally, when developer moral hazard exists with respect to investments in cost-reducing technology, the optimal auction will make the developer's success in the auction more sensitive to the developing firm's announced costs.

Keywords: Contract theory, Incentives

JEL Classification: C70, D82

Suggested Citation

Stole, Lars A., Information Expropriation and Moral Hazard in Optimal Second-Source Auctions (July 1, 1994). Journal of Public Economics, Vol. 54, 1994. Available at SSRN: https://ssrn.com/abstract=2397277

Lars A. Stole (Contact Author)

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
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