The imperfect appropriability of revenues from innovation affects the incentives of firms to invest, and to disclose information about their innovative productivity. It creates a free-rider effect in the competition for the innovation that countervails the familiar business-stealing effect....

Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper provides a rationale for the observed pattern in public procurement of underinvestment in design specification. We propose a two-stage model in which the sponsor first...