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Federal agencies can directly purchase more than 8 million commercial products and services through the General Services Administration’s (GSA) multiple award schedules (MAS) contracts. Over the past 10 years, MAS contract sales have increased dramatically--with sales jumping from $4 billion to $32 billion. In addition to simplifying the procurement process, the MAS program is designed to take advantage of the government’s significant aggregate buying power. While GSA seeks to negotiate best pricing for its MAS contracts by analyzing vendor-provided information--such as discounts given to other customers and recent sales data for the same or similar items--past reports have found that GSA has not always used pricing tools effectively and that management controls for better ensuring fair and reasonable pricing had been reduced. This report discusses GSA’s process for negotiating most favored customer prices for MAS contracts and its efforts to improve the overall quality of negotiations. Contract negotiators at the four MAS acquisition centers that GAO reviewed use a variety of tools for obtaining most favored customer pricing--that is, the prices vendors offer their best customers. However, the GAO analysis of GSA’s review of selected fiscal year 2004 MAS contract files found that nearly 60 percent lacked the documentation needed to establish clearly that the prices were effectively negotiated. Specifically, the contract documentation did not establish that negotiated prices were based on accurate, complete, and current vendor information; adequate price analyses; and reasonable price negotiations. GSA’s efforts to ensure most favored customer pricing have been hindered by the significant decline in the use of pre-award and postaward audits of pre-award pricing information, two independent pricing tools that have helped GSA avoid or recover hundreds of millions of dollars in excessive pricing. In fiscal year 1995, GSA conducted 154 pre-award audits; by 2004 the number of pre-award audits fell to 40. Postaward audits--which resulted in an average annual recovery of $18 million in the early 1990s--were discontinued in 1997 when GSA revised its MAS contract audit policies to increase the use of pre-award audits--an increase that has not materialized. In March 2003, GSA established the Acquisition Quality Measurement and Improvement Program, initiating the use of prenegotiation panels and postaward quality reviews of contracts. However, the effectiveness of these initiatives has been limited due to insufficient oversight. For example, three of the MAS acquisition centers that GAO visited had not reported the results of their 2003 prenegotiation panels--information needed by management to identify problems and make needed improvements. Moreover, the fourth acquisition center--which accounted for about 56 percent of the fiscal year 2004 MAS sales--has yet to hold a panel. While the postaward quality reviews--the second program initiative--have identified deficiencies in contract file documentation, they did not determine the underlying causes of these deficiencies or prescribe actions needed to address them. As a result of these weaknesses, GSA cannot be assured that fair and reasonable prices have been negotiated for its MAS contracts.

Platforms in two-sided markets are known to provide subsidies to either buyers or sellers, in order to take advantage of cross-group externalities inherent in such industries. Online travel agents can be thought of as platforms facilitating trade between passengers and travel service providers (airlines). This chapter evaluates the effects of a buyer subsidy provided by one major US online travel agent – a low-price guarantee offered by Orbitz. We find evidence consistent with increased airline participation with this travel agent upon implementation of the low-price guarantee policy. Our results also confirm the theoretical claims that most-favored customer low-price guarantee policies are procompetitive.

This paper addresses the issue of mass‐customisation from the point of view of consumer demand. It aims to develop a framework to examine the demand side of the mass‐customisation equation which will allow researchers to identify whether a market of customers who are ready for mass‐customised products exists. In doing so it considers in particular three “inconveniences” of mass‐customisation: the increased price of customised products; the delay in receipt of custom‐made products; and the need for customers to invest time in specifying their preferences before the product can be produced.

The Department of Veterans Affairs (VA) spent $500 million and the Department of Defense (DOD) spent $240 million for medical and surgical supplies in fiscal year 2001. Since the 1980s, to achieve greater efficiencies through improved acquisition processes and increased sharing of medical resources, VA and DOD signed a memorandum of agreement in 1999 to combine their buying power. VA and DOD saved $170 in 2001 by jointly procuring pharmaceuticals, by agreeing on particular drugs to be purchased, and contracting with the manufacturers for discounts based on their combined larger volume. VA and DOD have not awarded joint national contracts for medical and surgical supplies as envisioned by their memorandum of agreement, and it is unlikely that the two departments will have joint national contracts for supplies anytime soon. However, a few VA and DOD facilities have yielded modest savings through local joint contracting agreements. The lack of progress have made in jointly contracting for medical and surgical supplies has, in part, been the result of their different approaches to standardizing medical and surgical supplies. Other impediments to joint purchasing have been incomplete procurement data and the inability to identify similar high-volume, high-dollar purchases.

This paper lays out the uses of demand curves, both for profit optimization, strategy, tiering and list price setting. This tool is also useful in public policy, such as extending health‐care coverage. It describes how to build a demand curve, and draw useful conclusions.

This paper provides examples of actual demand curves, and how they have been used for new product development, and in out‐maneuvering competitors. Examples are drawn from a number of industries, such as telecom, information services, insurance and electronics, and show how supply and demand are not static, but are highly interactive.

Companies and legislators are not familiar with the demand curves, despite its long history of use in academia. As a result of unfamiliarity with this tool, companies often make costly mistakes in estimates of new product uptake and volumes. If instead of demand curves they rely on price elasticities, companies deprive their senior management of a tool that suggests strategic responses to competitive situations. Surprisingly, many companies have never actually developed a demand curve for their markets.

This article allows managers have not actually seen a real demand curve to see one, and understand what this tool could do for them. It gives examples of new product development and tiering to address multi‐price level markets. In addition, it suggests how public policy makers should focus on shaping supply and demand, rather than imposing floors or ceilings on prices for health‐care coverage. Price ceilings today are responsible for widespread gaps in health care coverage. Finally, the literature on demand curves fails to show how supply and demand are highly interactive.

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

The purpose of this paper is to explore both the antecedents and the impact of a buying company having preferred customer status. Specific attention is paid to an, until now, unexplored antecedent: the buyer’s maturity as perceived by the supplier. In terms of impact, the focus is on the link between obtaining preferred customer status from a specific supplier and the buyer’s satisfaction with its collaboration with that supplier.

Two case studies in the Dutch construction industry were conducted and, in each case, representatives of three companies were interviewed: one supplier plus two of its customers, one of them having a preferred status. As such, a total of four dyadic matched-pair inter-organizational relationships have been investigated.

First, it is beneficial for buying companies to obtain preferred customer status at their suppliers, since this will have a positive impact on the buying company’s satisfaction with the collaboration. Second, if buying companies aim to obtain preferred customer status at their suppliers it is important that they are perceived as mature in managing supplier relationships.

Although buying companies and suppliers often both want to increase their mutual business, there can be many factors that impede this. The framework presented in this research can help companies overcoming these impediments.

This is the first study exploring the impact of being a preferred customer on the buyer-supplier relationship in the construction industry.

Assesses the place of Heinrich von Stackelberg in the history of ideas as reflected in the literature of economics. Uses evidence from three main sources: histories of economics, the periodical literature and doctoral dissertations to support the conclusion that Stackelberg already has an important and lasting place in the history of economic thought. Points out that the use of Stackelberg’s ideas and techniques is now as general and common as the use of those of Cournot, Walras, Pareto and Nash. Presents a short section devoted to his views on state control because these are so often misunderstood. Speculates on possible reasons why Stackelberg is not ranked more highly than he usually is.

The California State University System (CSU) utilizes a cooperative buying program to provide a wide range of electronic resources at the lowest negotiable prices. The System’s Electronic Access to Information Committee (EAR) surveys campus needs, identifies and reviews resources, and makes recommendations for purchase. The CSU Software and Electronic Information Resources Office arranges product demonstrations and negotiates contracts. This paper reviews the history and operations of EAR and SEIR, the Principles for the Acquisition of Electronic Information Resources, and the Criteria and Recommendations for an Initial Core Collection. The advantages, disadvantages, and future of this approach will also be considered.