Competition for Procurement Contracts and Underinvestment
构建两期模型，发现即使企业相互竞争，在买方无法可信地预先承诺第二期合同时，企业投资仍低于社会最优水平。
A two-period model is considered in which ex ante identical firms invest in period one, and in period two, after they learn their costs, the lowest cost firm is chosen as the winner of the contract. It is found that even though firms are racing against one another, they end up underinvesting relative to the ex ante socially optimal levels when the buyer is unable to credibly precommit to the second period contract.