Corruption and Incompetence in Public Procurement

Antonio Estache and Renaud Foucart

Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: We study a game where inefficiencies in public procurement managed by politicians comefrom two sources: corruption (moral hazard) and incompetence (adverse selection). We characterizethe respective impact of judicial and accounting courts on the cost effectiveness ofprocurement and the level of corruption. Although improving the quality of both courts mattersas a direct deterrent of corruption, it may also indirectly decrease the quality of the poolof politicians and hence deteriorates the cost efficiency of procurement.

Keywords: moral hazard; adverse selection; procurement (search for similar items in EconPapers)
JEL-codes: D72 H57 L30 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2016-02
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