Laura H. Baldwin

Bidder Collusion at Forest Service Timber Sales

Allegations of Bidder collusion at Forest Service timber sales in the Pacific Northwest were common in the 1970s. Of course, prices may be low for reasons other than collusion. We formulate an empirical model that allows for both bidder collusion and supply effects and in which we control for demand conditions. Noncooperative behavior in which a single unit is sold (the standard auction model) is a special case: it is found to be definitively outperformed by a model of collusion. We also find that supply effects are dominated by collusion in determining the winning bids in the market.

Managing U.S. Air Force Aircraft Operating and Support Costs: Insights from Recent RAND Analysis and Opportunities for the Future

Abstract : Air Force aircraft operating and support (O and S) costs grew at an average rate of 6.5 percent per year1between fiscal years (FYs) 1996 and 2011 despite a reduction of over 1,000 aircraft in the Air Force fleet and minimal increases in total flying activity. Aircraft O and S costs climbed from 23 percent of the Air Forces total obligational authority in FY 1996 to 28 percent by FY 2011. While O and S costs have declined somewhat since FY 2011, they continue to threaten to crowd out future force modernization efforts, including research and development and procurement. Detailed data to illuminate the full set of drivers of these trends are not widely available or consistently analyzed by Air Force analysts. As a result, there is a lack of understanding among Air Force leadership about the primary drivers of recent O and S cost growth and the linkages between mission readiness and O and S costs. This presents challenges as the Air Force works to mitigate and even reverse these cost trends while balancing mission readiness going into the future.

Transfer prices for air force component repair decisions

In 1992, the Air Force implemented transfer pricing to manage repair decisions for most reparable components. This market‐like system is intended to provide internal customers with incentives to make cost‐effective repair decisions; namely, repair a broken part locally versus sending it to a repair depot. However, Air Force transfer prices diverge from marginal costs along a number of dimensions and, thereby, provide incentives to behave in ways that minimize private costs but increase system costs. An alternative structure that would cause customers to face the costs their decisions impose upon the support system is recommended.