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Author: William Paul Rogerson Publisher: ISBN: Category : Business & Economics Languages : en Pages : 86
Book Description
The defense sector is subject to a form of cost-based economic regulation, just as public utilities are. A set of regulations determines the price that defense contractors will receive for their products. This report describes and empirically investigates an extremely simple theory that captures an important aspect of the regulatory problem in defense contracting. The theory describes a critical difference between the regulatory problems in defense and public utilities and suggests why therefore different rules and institutions might be appropriate in each case. It also identifies several implications regarding the structuring of an optimal regulatory policy and sheds light on current policy debates over Department of Defense policy. The author empirically verifies that the incentives posited by the theory exist and are large. The theory is that profit regulation of defense contractors is structured (and necessarily must be structured) so that firms generating valuable new innovations will receive large rewards or prizes. The author attempts to establish the theoretical link between prizes and innovation and then to show that price levels induced by the current rules are large enough to make a theoretical analysis of the role of these prizes important.
Author: William Paul Rogerson Publisher: ISBN: Category : Business & Economics Languages : en Pages : 86
Book Description
The defense sector is subject to a form of cost-based economic regulation, just as public utilities are. A set of regulations determines the price that defense contractors will receive for their products. This report describes and empirically investigates an extremely simple theory that captures an important aspect of the regulatory problem in defense contracting. The theory describes a critical difference between the regulatory problems in defense and public utilities and suggests why therefore different rules and institutions might be appropriate in each case. It also identifies several implications regarding the structuring of an optimal regulatory policy and sheds light on current policy debates over Department of Defense policy. The author empirically verifies that the incentives posited by the theory exist and are large. The theory is that profit regulation of defense contractors is structured (and necessarily must be structured) so that firms generating valuable new innovations will receive large rewards or prizes. The author attempts to establish the theoretical link between prizes and innovation and then to show that price levels induced by the current rules are large enough to make a theoretical analysis of the role of these prizes important.
Author: Publisher: ISBN: Category : Languages : en Pages : 68
Book Description
The defense sector is subject to a form of cost-based economic regulation, just as public utilities are. A set of regulations that are as detailed, all-encompassing, and arcane as any that can be found in other regulated sectors determines the prices that defense contractors will receiver for their products. These regulations are often referred to as the Department of Defense (DoD) profit policy. Although economists have made great strides in analyzing the nature of the regulatory problem in several industries, little attention has been devoted to the defense sector. The goal of this report is to describe and empirically investigate an extremely simple theory that captures an important aspect of the nature of the regulatory problem in defense contracting. The theory describes a critical difference between the regulatory problems in defense and public utilities and therefore suggests why different rules and institutions might be appropriate in each case. Furthermore, it yields several implications regarding how an optimal regulatory policy should be structured and sheds light on current policy debates over DoD profit policy. A large part of the document is devoted to empirically verifying that the incentives posited by the theory exist and are large.
Author: Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
In negotiating profit on contracts, the Department of Defense (DOD) requires contracting officers to set negotiating objectives by relying on guidelines contained in defense regulations. Congress mandated in the National Defense Authorization Act for Fiscal Year 2000 (P.L. 106-65, Oct. 5, 1999) that DOD review its profit guidelines and consider whether modifying those guidelines would provide an increased incentive for contractors to develop and produce complex and innovative new technologies for weapon systems. After completing its review, DOD issued a final rule in December 2000 that added a technology incentive to its guidelines for setting profit objectives on negotiated defense contracts. At your request, we reviewed DOD's change to its profit policy to determine whether the new policy is (1) likely to achieve its intended objective of stimulating increased innovation and (2) consistent with its revised policies for acquiring weapon systems.
Author: Jean-Jacques Laffont Publisher: MIT Press ISBN: 9780262121743 Category : Business & Economics Languages : en Pages : 746
Book Description
Based on their work in the application of principal-agent theory to questions of regulation, Laffont and Tirole develop a synthetic approach to this field, focusing on the regulation of natural monopolies such as military contractors, utility companies and transportation authorities.
Author: William Paul Rogerson
Author: William Paul Rogerson
Author: William Paul Rogerson
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Author: United States. General Accounting Office
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Author: 
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Author: United States. General Accounting Office
Author: James L. Field
Author: Jean-Jacques Laffont