Dual Sourcing in Repeated Procurement Competitions

@inproceedings{Klotz1995DualSI,
  title={Dual Sourcing in Repeated Procurement Competitions},
  author={Dorothy E. Klotz and Kalyan Chatterjee},
  year={1995}
}
The issue of maintaining competition over time in a repeated procurement setting is important for both government and private sector buyers. The U.S. Department of Defense has experimented with splitting production quantities between two or more contractors in an effort to make government business more attractive for the private sector. This paper analyzes the effectiveness of this strategy. We find that in a two-period model with production learning and entry costs, dual sourcing, even for the… CONTINUE READING