For a repeated procurement problem, we compare two stylized negotiating cultures which differ in how the buyer uses an … entrant to exert pressure on the incumbent resembling U.S. style and Japanese style procurement. In each period, the suppliers … are privately informed about their production cost, but only the incumbent can influence the buyer s procurement mechanism …

post. We show that this is achieved by bilateral negotiations but not by auctions. Negotiations strictly outperforms … use of negotiations as a procurement mechanism in private industry …For the procurement of complex goods the early exchange of information is important to avoid costly renegotiation ex …