Suchergebnisse

"To: Commercial Health Insurers, Blue Cross and Blue Shield of Massachusetts (BCBSMA), Health Maintenance Organizations."

Fifteen examples of contracts developed between the US government & private firms are examined to explore how this practice conforms to a principal-agent model of cost minimization via competitive bidding & the importance of the many qualifications to the model. It is shown that the course of private contracting is not always smooth, as evidenced by the many contract disruptions observed & by the number of cities that, believing that contracting is no longer saving them money, have resumed public production. It is also indicated that: (1) competition generally reduces initial costs & results in persistent cost savings in some cases, (2) such competition can be stimulated, & (3) providing for continual interaction rather than simply monitoring performance can help prevent disruption. 7 Tables, 1 Figure, 10 References. Modified HA

Consider a Cournot oligopoly where producers launch new products. At first potential buyers are unaware of the product, and firms decide on levels of production, advertising expenditure and a cost-reducing investment. We find the conditions for complementarities among scale, advertising and innovation strategies to arise. In a duopoly with substitute products all variables are higher for the firm that moves from mass advertising to targeted advertising but decrease for the other. In an oligopoly with complementary products all variables are higher for all firms when they shift away from mass marketing. We conclude by linking our results to the empirical literature on internalization which finds a positive relationship between advertising intensity and foreign direct investment.

Examines 15 cases of local government contracting; uses a competitive bidding model; US.