Delegating Procurement to Experts

Tracy Lewis and Chifeng Dai

No 247, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: Buyers frequently delegate purchase decisions to sellers who are better informed about supply options and the cost of service. This paper analyzes how buyers optimally contract with sellers who vary in their expertise at prescribing service. We show that the most expert suppliers offer the greatest variation in advice. Buyers benefit from dealing with experts provided they contract sequentially whereby terms are negotiated gradually as the supplier acquires information

Keywords: procurement; contract; information structures (search for similar items in EconPapers)
JEL-codes: D81 D82 L14 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:247

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