Cost plus is not obviously cost increasing. It passes on cost uncertainty to the buyer, who may be the lower cost risk bearer. This may particularly be true if there is uncertainty about the final product, that is to say, if the buyer wants changes during the course of the contract. Cost plus is a very simple contract to renegotiate. On the other hand, it carries substantial enforcement costs, because production costs have to be verified. Bill Sjostrom
+++++++++++++ William Sjostrom Senior Lecturer in Economics Centre for Policy Studies National University of Ireland, Cork 5 Bloomfield Terrace, Western Road Cork, Ireland +353-21-490-2091 (work) www.ucc.ie/~sjostrom/ ----- Original Message ----- From: "Technotranscendence" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Saturday, October 02, 2004 3:10 PM Subject: Cost-plus financing > Do you know of any studies of cost-plus financing, especially as used by > the US government in funding aerospace projects? I know this is one of > the main ways NASA funds its projects and it would seem to increase the > cost of any project. > > Regards, > > Dan > http://uweb.superlink.net/neptune/MyWorksBySubject.html > >
