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Image of Contracting for Complex Products

Journal Articles

Contracting for Complex Products

Brown, Trevor L. - Personal Name; Potoski, Matthew - Personal Name; Van Slyke, David M. - Personal Name;

A fundamental source of contracting failure is product uncertainty. When the product's cost, quality, and quantity cannot be easily defined, buyers and sellers are unable to clearly and completely define exchange terms. The risk is that the buyer is the only purchaser of this "complex product," and once the contract is let, the vendor is the only supplier. The consequence is a collective action problem in which each party has incentives to exploit contract ambiguities for their own gain at the other's expense. We lay out the theoretical case for how complex contracting risks collective action problems. We then illustrate the theory's analytic value with the case of the Coast Guard's controversial Deepwater project, a major acquisition program to upgrade and integrate its fleet of air and sea assets. Through this case, we show how managing the state of agents requires understanding how different principal-agent relations’ work.


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Detail Information
Series Title
Journal of Public Administration Research and Theory
Call Number
-
Publisher
Oxfordshire, United Kingdom : Oxford University Press., 2010
Collation
-
Language
English
ISBN/ISSN
10531858
Classification
-
Content Type
-
Media Type
-
Carrier Type
-
Edition
Volume 20, Supplement 1, January 2010. Pp. i41-i58
Subject(s)
-
Specific Detail Info
-
Statement of Responsibility
-
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No other version available

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Kemitraan Library
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Established in 2003, the Library of Kemitraan was originally designed to record and collect all Kemitraan and grantees publications. However, today it broadly develops and serves more sectors to expand the collection to facilitate research activities, particularly since the inception of the Knowledge and Research Management within Kemitraan.

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