Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/287867 
Year of Publication: 
2022
Citation: 
[Journal:] Bulletin of Economic Research [ISSN:] 1467-8586 [Volume:] 75 [Issue:] 1 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2022 [Pages:] 202-208
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
Many firms invent and design products while outsourcing their production to independent contractors. We consider a dominant strategy mechanism that selects a contractor using a reverse auction, combined with a menu of permitted change orders from which the contractor can choose after updated cost information has become available. That mechanism maximizes the gain from trade, allows the firm to extract the second highest surplus, and induces the contractor to make efficient adjustments to output after updated cost information has emerged.
Subjects: 
auctions
change orders
mechanism design
outsourcing
procurement
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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