Discrimination in Dynamic Procurement Design with Learning-by-doing |
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| Institution: | 1. SKEMA Business School – Université Côte d’Azur, 60 Rue Fedor Dostoievski, Sophia Antipolis 06902, France;2. CREST, École polytechnique, Institut Polytechnique de Paris, 5 avenue Henry Le Chatelier, Palaiseau 91120, France;1. School of Economics, Sichuan University, No.24 South Section 1, Yihuan Road, Chengdu 610065, China;2. Department of Economics, National University of Singapore, 117570, Singapore;1. Netherlands Authority for Consumers and Markets (ACM), the Netherlands;2. Tilburg School of Economics and Management (TiSEM), Tilburg University, the Netherlands;1. Department of Economics, Michigan State University, 486 West Circle Drive, East Lansing, MI 48824;2. Department of Economics, Nazarbayev University, 53 Kabanbay Batyr, Astana 010000, Kazakhstan;3. Department of Economics, Michigan State University, 486 West Circle Drive, East Lansing, MI 48824;1. Insper Institute of Education and Research (INSPER), Rua Quatá 300, São Paulo, SP, 04546-042, Brazil;2. University of São Paulo (USP), Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo (FEA-USP), Avenida Professor Luciano Gualberto 908, São Paulo, SP, 05508-010, Brazil;1. Smith School of Business of Queen''s University;2. Economics Department at the University of Oklahoma |
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| Abstract: | We study the long-run impact of procurement discrimination on market structure and future competition in industries where learning-by-doing makes incumbent firms more efficient over time. We consider a sequential procurement design problem in which local and global firms compete for public good provision. Both firms benefit from learning-by-doing if they provide the public good in the previous period, but global firms only may be able to transfer learning-by-doing from different markets. We show that the optimal procurement has to be biased in favor of the local firm even when all firms are symmetric with respect to their initial cost distribution. |
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