We analyze optimal mechanisms in environments where sellers are privately informed about quality. A methodology is provided for deriving conditions that are necessary and sufficient to determine when two simple trading environments maximize either social or private surplus. The commonly used auction mechanism is frequently inefficient in procurement environments. Often, the optimal mechanism is simply to order potential suppliers and to tender take-it-or-leave-it offers to each sequentially. We completely characterize the environments in which either mechanism is optimal. In doing so, we develop a general methodology that determines when and if a given trading institution is optimal.

This paper examines the effect on health outcomes of moving from cost-based to prospective reimbursement of hospitals. The paper reaches two conclusions. First, hospitals that experienced average price declines had a greater share of deaths occur in the hospital or shortly after discharge. By one year postdischarge, however, this increased mortality was eliminated. Second, there was an increase in readmission rates as hospitals were no longer reimbursed for marginal units of care they provided. This increased readmission appears to be due to accounting changes on the part of hospitals rather than changes in patient morbidity.

With the same normalization as that for standard parametric statistics, and centered at a parameter of interest, many semiparametric estimates based on n observations have been shown to be root-n-consistent and asymptotically normal. In the context of semiparametric averaged derivative estimates, the author goes further by showing that the rate of convergence of the finite-sample distribution to the normal limit distribution can equal that of standard parametric statistics.