Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Preface
- Part I Preliminary Issues
- Part II General Strategic Principles
- Part III Competitive Tendering Strategies
- Part IV Attracting and Screening Participants
- Part V Preventing Collusion and Corruption
- Part VI Dynamic Forces and Innovation
- 17 Managing dynamic procurements
- 18 Designing reputation mechanisms
- 19 Procuring innovations
- Glossary
- Index
- References
17 - Managing dynamic procurements
Published online by Cambridge University Press: 04 November 2009
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Preface
- Part I Preliminary Issues
- Part II General Strategic Principles
- Part III Competitive Tendering Strategies
- Part IV Attracting and Screening Participants
- Part V Preventing Collusion and Corruption
- Part VI Dynamic Forces and Innovation
- 17 Managing dynamic procurements
- 18 Designing reputation mechanisms
- 19 Procuring innovations
- Glossary
- Index
- References
Summary
Introduction
Recently we considered which laptop computer to purchase for the new and returning faculty at our business school. The choice was between an old proven brand that we had been using and a new brand that was attractively priced but unfamiliar to our people. The old brand was reliable but it had not been updated much recently, whereas the new brand incorporated some advanced technology and attractive design features. Overall the new brand seemed like a better buy than the old one. But, there was a cost to switching from the old to the new brand. We would have to learn new skills to operate the new brand and our technicians would need additional training to repair and service the new machines.
We decided after much deliberation to remain with the old brand. The cost of switching computers was too high. We realized the school had become so dependent on the old technology that we were locked in. Switching to a new one was not feasible, at least not in short run. But, this was just the tip of the iceberg. We discovered there were many more products and services that we were locked into buying, including computer software, reproduction equipment, communication services, and information technology. In each case, we would need to retrain our employees and adjust our operating procedures to switch products.
Information
- Type
- Chapter
- Information
- Handbook of Procurement , pp. 433 - 445Publisher: Cambridge University PressPrint publication year: 2006
References
(1963). Reliability of Progress Curve in Airframe Production, Econometrica, 31 (4), 679–693.CrossRefGoogle Scholar
and (1987). Second Sourcing and Experience Curve: Price Competition in the Defense Procurement, RAND Journal of Economics, 18 (1), 57–76.CrossRefGoogle Scholar
Appelyard, M. (2002). Cooperative Knowledge Creation: The Case of Buyer–Supplier Co-Development in the Semiconductor Industry, Working Paper, University of Virginia.
, , and (1990). The Persistence and Transfer of Learning in Industrial Settings, Management Science, 36, 140–154.CrossRefGoogle Scholar
(1956). Cost–Quantity Relationships in the Airframe Industry, Report 291. Santa Monica, CA: RAND Corporation.Google Scholar
(2000). Learning and Forgetting: The Dynamics of Aircraft Production, American Economic Review, 90 (4), 1034–1054.CrossRefGoogle Scholar
and (1990). Switching Costs and Bidding Parity in Government Procurement of Computer Systems, Journal of Law, Economics, and Organizations, 6 (2), 453–469.Google Scholar
and (1994). The Learning Curve, Market Dominance, and Predatory Pricing, Econometrica, 62 (5), 1115–1140.CrossRefGoogle Scholar
, , and (1995). The Acquisition, Transfer, and Depreciation of Knowledge in Service Organizations: Productivity in Franchises, Management Science, 41(11), 1750–1762.CrossRefGoogle Scholar
(1972). Learning and Productivity Changes in Metal Products, American Economic Review, 62, 662–669.Google Scholar
Farrell, J. and P. Klemperer (forthcoming). Coordination and Lock-In: Competition with Switching Costs and Network Effects, in Handbook of Industrial Organization, vol. 3, M. Armstrong and R. Porter (eds.), North Holland.
(1995). Sole Source Versus Competitive Bidding: US Government Agencies’ Procedural Choice for Mainframe Computer Procurement, Journal of Industrial Economics, XLIII (2) 125–140.CrossRefGoogle Scholar
(1997). Lock-in and the Costs of Switching Mainframe Computer Vendors: What Do Buyers See, Industrial and Corporate Change, 6 (2), 247–273.CrossRefGoogle Scholar
(1998). Learning by Doing and Spillovers: Further Evidence for the Semiconductor Industry, Review of Industrial Organization, 13 (6), 697–711.Google Scholar
(1952). Manufacturing Progress Functions, Review of Economics and Statistics, 34 (2), 143–155.CrossRefGoogle Scholar
, , and (1978). Vertical Integration, Appropriable Rents, and the Competitive Contracting Process, Journal of Law and Economics, 21 (2), 297–326.CrossRefGoogle Scholar
, 1995. “Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macro Economics, and International Trade,”Review of Economic Studies, 62, 515–39.CrossRefGoogle Scholar
and (1993). A Theory of Incentives in Procurement and Regulation. Cambridge, MA: The MIT Press, 1993.Google Scholar
Lewis, T. and H. Yildirim (2002). “Managing Dynamic Competition”, American Economic Review, 92 (4), 779–97.CrossRef
and (2005). Managing Switching Costs in Multiperiod Procurements with Strategic Bugers, International Economic Review, 46 (4), 1233–69.CrossRefGoogle Scholar
(1996). Firm-Specific Learning by Doing in Semiconductor Production: Some Evidence from the 1986 Trade Agreement, Review of Industrial Organization, 11 (3), 383–394.CrossRefGoogle Scholar
(2002). Supplier Surfing: Competition and Consumer Behavior in Subscription Markets, RAND Journal of Economics, 34 (2), 223–246.CrossRefGoogle Scholar
Thompson, P. (2001). How Much Did the Liberty Shipbuilders Learn? New Evidence for an Old Case Study, Journal of Political Economy, 109 (1), 103–137.
(1975). Markets and Hierarchies: Analysis and Antitrust Implications. New York: The Free Press.Google Scholar
Accessibility standard: Unknown
Why this information is here
This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.Accessibility Information
Accessibility compliance for the PDF of this chapter is currently unknown
and may be updated in the future.
- 1
- Cited by