On the trade-off between supplier diversity and cost-effective procurement
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http://hdl.handle.net/10045/138542
Title: | On the trade-off between supplier diversity and cost-effective procurement |
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Authors: | Alcalde, Jose | Dahm, Matthias |
Research Group/s: | Desarrollo, Métodos Cuantitativos y Teoría Económica (DMCTE) |
Center, Department or Service: | Universidad de Alicante. Departamento de Fundamentos del Análisis Económico | Universidad de Alicante. Instituto Interuniversitario de Desarrollo Social y Paz |
Keywords: | Affirmative action | Set-asides | Dual sourcing | Supply chains | Procurement |
Issue Date: | 16-Nov-2023 |
Publisher: | Elsevier |
Citation: | Journal of Economic Behavior & Organization. 2024, 217: 63-90. https://doi.org/10.1016/j.jebo.2023.10.038 |
Abstract: | The COVID-19 pandemic has highlighted the need to rely on a diverse pool of suppliers, besides achieving cost effectiveness. Common wisdom, however, holds that these two aims are in conflict. We explore a model of dual sourcing and propose complementing a share auction with affirmative action to create an endogenous set-aside for a high-cost supplier. In our model more intensive affirmative action strengthens the targeted provider. This has the potential to level the playing field, inducing more competitive procurement overall. Our main result provides a condition under which the endogenous set-aside not only guarantees a very substantial share for the high-cost supplier, but also reduces the buyer's provision cost compared to a standard auction. We also illustrate how our approach can help reducing the severity and likelihood of health product shortages, such as those occurred during the COVID-19 outbreak. |
Sponsor: | This work is partially supported by the Spanish Ministerio de Economía y Competitividad, project ECO2016-77200-P, and Ministerio de Ciencia e Innovación, project PID2022-138111NB-I00. |
URI: | http://hdl.handle.net/10045/138542 |
ISSN: | 0167-2681 (Print) | 1879-1751 (Online) |
DOI: | 10.1016/j.jebo.2023.10.038 |
Language: | eng |
Type: | info:eu-repo/semantics/article |
Rights: | © 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). |
Peer Review: | si |
Publisher version: | https://doi.org/10.1016/j.jebo.2023.10.038 |
Appears in Collections: | INV - DMCTE - Artículos de Revistas |
Files in This Item:
File | Description | Size | Format | |
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Alcalde_Dahm_2024_JEconBehavOrganizat.pdf | 1,02 MB | Adobe PDF | Open Preview | |
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