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Defense Contractor Buyer-Seller Relationships: Theoretical Approaches, Carl R. Templin

Faculty Publications

This article examines the applicability of three theoretical approaches to defining defense buyer-seller relationships. Economic Free-Market Theory explains the relative economic power of the participants but ignores the legal, political, and socioeconomic aspects so pervasive in defense acquisitions. Transaction Cost Economics provides a framework for determining the most cost-effective type of contract governance for each transaction. Systems theory explores the degree of interdependence between the buyers and sellers systems. Each theory contributes unique insights into defense buyer-seller relationships that can be used to judge the appropriateness of contracting laws, regulations, policies, and management approaches for specific acquisition environments.