Abstract
Should the government procure equipment for its agencies or let them run their own procurement auctions? Suppose the agency has private information about product quality, but is inclined to favour local suppliers. Decentralization saves bureaucracy and “agency costs” (costs tied to truthful revelation of quality information), but leads to biased decisions (a discriminatory auction). I show that the costs associated with discrimination may increase when the quality differences (or the probability that the agency knows the quality) increase. Moreover, this effect may be dominant, implying that increased importance of local information may be an argument for centralization.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
