Pairing provision price and default remedy: optimal two-stage procurement with private R&D efficiency

• 成果类型: Article
• 署名作者: Liu, Bin; Lu, Jingfeng
• 署名单位: The Chinese University of Hong Kong, Shenzhen; National University of Singapore
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12247
• 发表日期: 2018
• 页码: 619-655
• 关键词: Dynamic mechanism; moral hazard; CONTRACTS; DESIGN; INVESTMENT; auctions; incentives; MODEL

摘要

This article studies cost-minimizing two-stage procurement with Research and Development (R&D). The principal wishes to procure a product from an agent. At the first stage, the agent can conduct R&D to discover a more cost-efficient production technology. First-stage R&D efficiency and effort and the realized second-stage production cost are the agent's private information. The optimal two-stage mechanism is implemented by a menu of single-stage contracts, each specifying a fixed provision price and remedy paid by a defaulting agent. A higher delivery price is paired with a higher default remedy, and a more efficient type opts for a higher price and higher remedy.