Does surround‐bidding corruption hurt procurers?

Yuanzhu Lu, Xundong Yin and Hu Zhang

Manchester School, 2023, vol. 91, issue 4, 320-335

Abstract: We consider a model of corruption in the form of surround‐bidding in a first‐price procurement auction in which bidders' private cost follows uniform distribution. We find that the briber's high‐price bidding function is less aggressive than honest suppliers' while his low‐price one is more aggressive. As the bribery cost increases, both the briber's low‐price and high‐price bidding functions become less aggressive. The winning probability and expected profit of the briber increase, while the winning probability and expected profit of honest suppliers decrease. Surprisingly, although the briber's high‐price bid may be the winning bid, which is harmful to the procurer, the procurer's expected payment decreases, that is, the procurer benefits from surround‐bidding corruption, because the benefit due to more intense competition outweighs the harm caused by the briber's high‐price bid.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/manc.12432

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:manchs:v:91:y:2023:i:4:p:320-335

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1463-6786

Access Statistics for this article

Manchester School is currently edited by Keith Blackburn

More articles in Manchester School from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().