Does Dual Sourcing Lower Procurement Costs ?

  title={Does Dual Sourcing Lower Procurement Costs ?},
  author={Thomas P. Lyon and Kelley},
Defense policy encourages the use of competition in defense procurement, especially for relatively simple technologies. A number of recent papers have raised questions about the value of dual sourcing, since it sacri ̄ces scale economies, reduces the number of units over which each producer's learning occurs, and may induce collusion unless the bidders are unsure of each other's costs, e.g. for sophisticated technologies in the early phases of production. I explore the e®ects of dual sourcing… CONTINUE READING
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