Corruption and Competition in Procurement AuctionsOlivier Compte (), Ariane Lambert-Mogiliansky () and Thierry A. Verdier () RAND Journal of Economics, 2005, vol. 36, issue 1, pages 1-15 Abstract: We investigate the effect of corruption on competition in procurement. Our assumption is that the bureaucrat (i.e., the agent that administers the market), if corrupt, may provide an opportunity for bid readjusments in exchange for a bribe. As firms expect to be paying a bribe, a mechanical effect of corruption is to increase the contract price by an amount corresponding to the anticipated bribe. We show, however, that a key effect of corruption is to facilitate collusion in price between firms and thereby to generate a price increase that goes far beyond the bribe received by the bureaucrat. We discuss the effect of other forms of bureaucratic discretion in the procurement process and analyze conditions under which unilateral anticorruption controls restore price competition. Ordering information: This article can be ordered from https://pubs3.rand.org/cgi-bin/rje/pdf.cgi. Keywords: Auctions -- Bureaucracy; Administrative Processes in Public Organizations; Corruption National Government Expenditures and Related Policies: Procurement Auction; Bid; Competition; Corruption; Procurement (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:rje:randje:v:36:y:2005:1:p:1-15 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in RAND Journal of Economics from The RAND Corporation |
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