(Un)bundling infrastructure procurement: Evidence from water supply and sewage projects
Antonio Estache and
Atsushi Iimi ()
Utilities Policy, 2011, vol. 19, issue 2, 104-114
Public infrastructure has long been faced with difficulty in financing. Available public resources are often limited in many countries. Competitive bidding in public procurement systems is an important instrument to contain the public investment costs. But competition is often limited in the infrastructure sector. In such circumstances, better public procurement design can save a lot of public resources. There is a general tradeoff between the competition effect and economies of scale and scope; large contracts can benefit from the scale and scope effects but have to compromise competition. The unbundling approach can foster competition but may suffer from diseconomies of scale and scope. Using procurement data from water supply and sewage projects in developing countries, the paper analyzes the effects of the (un)bundling strategy on bidders' entry and bidding behavior. It shows that the bidder cost structure exhibits significant diseconomies of scope between two main public works in this sector, i.e., treatment plant construction and distribution network installation. There is no clear evidence of the competition effect. Therefore, there is no rationale of bundling these two works into a single contract. Unbundling can help governments to contain public infrastructure costs.
Keywords: Public; procurement; Auction; theory; Infrastructure; development; Governance (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: (Un)bundling infrastructure procurement: Evidence from water supply and sewage projects (2011)
Working Paper: (Un)Bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects (2009)
Working Paper: (UN)Bundling infrastructure procurement: evidence from water supply and sewage projects (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:19:y:2011:i:2:p:104-114
Access Statistics for this article
Utilities Policy is currently edited by D. Smith
More articles in Utilities Policy from Elsevier
Bibliographic data for series maintained by Haili He ().