The problem of optimally (re)allocating Navy personnel to combat units is compounded by several considerations: availability of trained personnel, staffing of positions by occupation groups or ranks, and maintaining an acceptable level of readiness. In this paper we model this problem as a nonlinear nondifferentiable optimization problem. A reformulation of the nonlinear optimization problem as a network flow problem is then developed. The formulation results in a network flow problem with side constraints. An additional, nonnetwork, variable measures the readiness level. This new formulation permits the use of network optimization tools in order to solve effectively very large problems. We then develop two numerical methods for solving this problem. One method is based on a heuristic that solves (approximately) the nondifferentiable problem. The second method is based on a Linear-Quadratic Penalty (LQP) algorithm, and it exploits the embedded network structure by placing the side constraints into the objective function. The resulting nonlinear network program is solved using a simplicial decomposition of the network constraint set. Numerical results indicate the viability of this approach on problems with up to 36,000 arcs and 17,000 nodes with 3,700 side constraints.

Private enforcement of regulatory policy is a significant feature of many government-sponsored contests, such as procurements. Although private enforcement is supposed to promote social welfare, we show that competitors can use it to achieve collusive outcomes. In a noncooperative duopoly setting, we show that the threat of litigation, and the possibility of settlement can dramatically affect ex ante competition in the relevant market. Essentially, the settlement process provides a legal mechanism for the exchange of side-payments, while the possibility of a court decision provides the plaintiff with a credible threat against the defendant so as to avert cheating. The result does not require repeated play, ex ante contracts, or other commitment devices. In the federal procurement context, we show that our results are robust to alterations in the court remedy, bargaining power of the litigants, and many other factors.

The article presents a list of books, which readers are reading. They include “Management by Policy: How Companies Focus Their Total Quality Efforts to Achieve Competitive Advantage,” “The Logic of Organizations,” and “The Vulnerable Fortress: Bureaucratic Organization and Management in the Information Age.”