Accountability to Contain Corruption in Procurement Tenders

Bernard Caillaud () and Ariane Lambert-Mogiliansky ()
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Bernard Caillaud: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Ariane Lambert-Mogiliansky: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This article addresses the issue of favoritism at the design stage of a complex procurement auction. A community of citizens procures a project but lacks the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms in exchange of a bribe. We investigate a simple accountability mechanism that requires justifying one aspect of the technical decision determined by the alerts of competitors (alert-based accountability [ABA]). We find that relying on competitors enables the community to deter favoritism significantly more easily than random challenges. The penalty needed to fully deter corruption is independent of the complexity of the project. It depends on the degree of differentiation within the industry. In an illustrative example, we study the patterns of favoritism when corruption occurs under ABA and compare them with the patterns in the random challenge mechanism.

Date: 2021-03
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Published in Journal of Law, Economics, and Organization, 2021, 37 (1), pp.41-67. ⟨10.1093/jleo/ewaa007⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03029899

DOI: 10.1093/jleo/ewaa007

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