This paper studies the interaction between financially constrained and financially strong firms on a procurement market. It characterizes and discusses a procurement agency's optimal response when faced with financially asymmetric firms. By considering a dynamic setting, both present and future...

Motivated by the EU concept of Pre-Commercial Procurement and the massivepresence of SMEs in the European economy, we study how budget constraints affect R&D effort in sequential elimination tournaments. We show that introducingbudget constraints leads to a non-monotonicity in unconstrained...