A Contest Model of Liberalizing Government Procurements

Ngo Long and Frank Staehler ()
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Frank Staehler: Department of Economics, University of Otago
Authors registered in the RePEc Author Service: Frank Stähler

No 803, Working Papers from University of Otago, Department of Economics

Abstract: This paper models government procurements as a contest among domestic firms, and - in case of liberalization - domestic and foreign firms. Liberalizing procurements reduces wasteful domestic lobbying but also increases the likelihood that a foreign firm will capture the rent. We show that the domestic welfare change is not monotonic in the foreign firmsÕ abilities. Domestic welfare increases only if the gross surplus generated by foreign firms is sufficiently large. Furthermore, we show that, from the global welfare point of view, domestically optimal liberalization policies can be either excessive or too restrictive.

Keywords: Trade liberalization; trade in services; government procurements. (search for similar items in EconPapers)
JEL-codes: F12 F13 H57 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2008-01, Revised 2008-01
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http://www.otago.ac.nz/economics/research/otago077107.pdf First version, 2008 (application/pdf)

Related works:
Journal Article: A contest model of liberalizing government procurements (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:0803

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