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Strategic procurement, openness and market structure

Garcia-Alonso, Maria D C, Levine, Paul (2008) Strategic procurement, openness and market structure. International Journal of Industrial Organization, 26 (5). pp. 1180-1190. ISSN 0167-7187. (doi:10.1016/j.ijindorg.2007.12.003)

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We examine strategic procurement behaviour by governments and its effect on market structure in sectors, such as defence and pharmaceuticals, where the government is the dominant consumer. In a world economy with trade between producer countries, and between producers and non-producers, we use a modified Dixit–Stiglitz utility function with an independent taste for variety. There is free entry and exit by firms, but by anticipating their participation constraint governments can indirectly choose the number of domestic firms and their size through its choice of procurement price. Unlike the standard model with no independent taste for variety and no external sector of non-producer countries, there are incentives for subsidies, openness impacts on industrial structure and procurement coordination between producer countries affects firm numbers.

Item Type: Article
DOI/Identification number: 10.1016/j.ijindorg.2007.12.003
Uncontrolled keywords: Procurement; Openness; Market structure; Defence and pharmaceutical sectors
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Maria Garcia-Alonso
Date Deposited: 24 Jul 2008 09:42 UTC
Last Modified: 28 May 2019 13:40 UTC
Resource URI: (The current URI for this page, for reference purposes)
Garcia-Alonso, Maria D C:
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