Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68077
Authors: 
García-Alonso, María del Carmen
Levine, Paul
Year of Publication: 
2005
Series/Report no.: 
Department of Economics Discussion Paper, University of Kent 05,03
Abstract: 
We examine strategic procurement behaviour by governments and its effect on market structure in sectors, such as defence, where the government is the dominant consumer. In a world economy with trade between producers, and between producers and non-producers, we use a modified Dixit-Stiglitz utility function with an independent taste for variety. Governments can, in effect, choose the number of domestic firms and their size by adjusting the procurement price. Unlike the standard model with no independent taste for variety and no external sector of non-producers, there are incentives for subsidies, openness impacts on industrial structure and there are potential gains from procurement coordination between producer countries.
Subjects: 
procurement
openness
market structure
defence and pharmaceutical sectors
JEL: 
F12
H56
L10
Document Type: 
Working Paper

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