Did Installed Base Given an Incumbent Any (Measurable) Advantages in Federal Computer Procurement?

Shane Greenstein

RAND Journal of Economics, 1993, vol. 24, issue 1, 19-39

Abstract: This research examines the relative strength and significance of the status of "incumbent contractor" in federal computer procurement. One finding, as expected, is that an agency is likely to acquire a system from an incumbent vendor. Another finding, perhaps more interesting, is that the (in)compatibility between a buyer's installed base and a potential system also influences the vendor choice; a result that may be the first econometric measurement of the competitive effects of incompatibility. An illustration of this thesis comes from IBM's experience. New evidence shows, however, that IBM's apparent disadvantage with government agencies is largely due to incompatibilities in IBM's product line.

Date: 1993
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