Subcontracting Decisions in California Highway Procurement Contracts

Theories of the firm suggest that problems such as contractual incompleteness and hold-up lead firms to produce more inputs in-house rather than purchasing them from potentially more efficient suppliers. Repeated interactions between firms and their suppliers are often thought to relieve such problems, as the risk of putting in jeopardy future business opportunities often outweighs the short-run gains from providing suboptimal levels of non-contractable output or holding up production to capture more rents. The research described in this proposal will empirically examine the role of relationships, in the form of repeat interactions, between contractors and subcontractors in the California state highway procurement market. Data from auctions awarding highway construction and repair contracts will be used to assess several questions. First, what determines relationship formation? Second, how do such relationships improve firm productivity? Third, how do these relationships lead to improved performance after the contract is awarded? These results will then be discussed in the context of California Department of Transportation policies, such as the affirmative action program for disadvantaged subcontractors.


    • English


    • Status: Active
    • Funding: $58641.00
    • Sponsor Organizations:

      California Department of Transportation

      1227 O Street
      Sacramento, CA  United States  95843
    • Project Managers:

      Briseno, Coco

    • Performing Organizations:

      University of California Transportation Center (UCTC)

      University of California, Berkeley
      2614 Dwight Way, 2nd Floor
      Berkeley, CA  United States  94720-1782
    • Principal Investigators:

      Ricard, Gil

      Marion, Justin

    • Start Date: 20060801
    • Expected Completion Date: 0
    • Actual Completion Date: 20080731
    • Source Data: RiP Project 15162

    Subject/Index Terms

    Filing Info

    • Accession Number: 01460128
    • Record Type: Research project
    • Source Agency: University of California Transportation Center (UCTC)
    • Files: UTC, RIP, STATEDOT
    • Created Date: Jan 3 2013 1:19PM