A contest model of liberalizing government procurements

Ngo Long and Frank Stähler

European Journal of Political Economy, 2009, vol. 25, issue 4, 479-488

Abstract: This paper models liberalization of government procurements as admitting entry of foreign firms in a contest among potential rent seekers. It contributes to the literature on how institutions influence socially desirable outcomes. Liberalizing procurements reduces wasteful domestic lobbying but also increases the likelihood that a foreign firm will capture the rent. A main result is that the domestic welfare change is not monotonic in the foreign firms' abilities. Furthermore, we show that domestic liberalization policies can be inefficient from the global point of view because foreign lobbying costs can outweight productive efficiency.

Keywords: Trade; liberalization; Trade; in; services; Government; procurements (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (14)

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Working Paper: A Contest Model of Liberalizing Government Procurements (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:25:y:2009:i:4:p:479-488

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