Corruption in Public Procurement Market

Tetsuro Mizoguchi and Nguyen Van Quyen

Pacific Economic Review, 2014, vol. 19, issue 5, 577-591

Abstract: The paper presents a model of public procurement in which the contracting officer is corrupt and extracts bribes from the bidding firms. The firms submit multidimensional bids, which consist of the quality and the price of the project that they propose to realize. The firms differ in their costs of realizing the project at a given quality, and these costs are private information. The contracting official, in exchange for a bribe, abuses the power of his or her public office by distorting the quality ranking of the bids and by giving the favoured firm an opportunity to readjust its bid to undercut its rivals. Our analysis suggests that when the firms serve only the internal market, the public project is realized at low quality and inflated prices. However, when the firms are also allowed to sell the product they develop for the internal market in a foreign market, the auction is ex post efficient.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1111/1468-0106.12084 (text/html)
Access to full text is restricted to subscribers.

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:pacecr:v:19:y:2014:i:5:p:577-591

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1361-374X

Access Statistics for this article

Pacific Economic Review is currently edited by Kenneth S. Chan and Yin-wong Cheung

More articles in Pacific Economic Review from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().