Parlane, SarahSarahParlane2008-11-252008-11-252003 Econo2003Economic and Social Review0012-9984http://hdl.handle.net/10197/685This paper analyses procurement when contractors have limited liability and when the sponsor cannot commit to any specific form of future negotiation. It shows that introducing limited liability enhances competition and thus the likelihood of bankruptcy. Among efficient auctions in which only the winner gets paid, the commonly used first price auction is shown to give the lowest probability of bankruptcy. Finally, it shows that the characterisation of a mechanism minimising the project’s cost results from trading-off bankruptcy costs with informational rents.118465 bytesapplication/pdfenIndustrial procurement--Mathematical modelsJournal Article341121https://creativecommons.org/licenses/by-nc-sa/1.0/