CORRUPTION IN PUBLIC PROCUREMENT AUCTIONS: POSITIVE EQUILIBRIUM ANALYSIS, INCENTIVE MECHANISM DESIGN, AND EMPIRICAL STUDY

Maria M. Wihardja ()
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Maria M. Wihardja: Centre of Strategic and International Studies, University of Indonesia

Journal of Economic Development, 2010, vol. 35, issue 1, 35-57

Abstract: We study how poor quality of institution, such as corruption in public procurement auction, could hurt welfare. We show how competition effect could improve the cost-efficiency but not the quality of a public procurement auction with corruption. In fact, no incentive mechanism can be efficient in this auction if qualities are non-contractible. An empirical study suggests that increasing the number of bidders does increase the percentage cost efficiency albeit at a decreasing rate and decreases the percentage cost efficiency after it reaches a certain number of bidders.

Keywords: Auctions; Procurement; Corruption (search for similar items in EconPapers)
JEL-codes: D44 D73 H57 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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