Private R&D and Second Sourcing in Procurement: An Experimental Study

This study focuses on two topics in government procurement problems: second sourcing, and private research and development investment procurement. A simple theoretical framework is developed to analyze the likely effects on private R&D and procurement prices of recent proposals regarding competition in procurement and the associated data0rights policy. The framework is also used to demonstrate a major flaw in the current methodology used in the evaluation of the benefits of sourcing. IN procurement environments where private R&D is an important factor and potential sellers have commercial markets which may be adversely affected, second sourcing may reduce competition in the initial procurement stage. Experimental methods are used to test for the existence of the effect.