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Public Procurement Win-Win Cooperation Support System with Benefit Sharing

  • Journal of Regulation Studies
  • 2020, 29(2), pp.225-250
  • DOI : 10.22954/ksrs.2020.29.2.008
  • Publisher : 한국규제학회
  • Research Area : Social Science > Public Administration
  • Received : October 19, 2020
  • Accepted : December 3, 2020
  • Published : December 31, 2020

Jinhyeong Jo 1 RYU, DOO JIN 1

1성균관대학교

Accredited

ABSTRACT

We propose to support a “benefit-sharing public procurement win-win cooperation system” to resolve the potential low-quality production drawback of separated profit-maximizing processes under the existing “public procurement win-win cooperation system”. Under this system, the downstream firms provide additional incentives to their upstream partners according to the quality of intermediate goods supplied. The upstream firms select between high-quality and low-quality production, considering their expected profits. We show that, in equilibrium, the upstream firms decide to supply high-quality intermediate goods given the benefit-sharing system. Nonetheless, under a certain condition when this system is inapplicable, upstream enterprises primarily take charge of the public procurement. In this case, we suggest facilitating the benefit-sharing system by considering these firms’ corporate social responsibility activities.

Citation status

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