EconPapers    
Economics at your fingertips  
 

(Un)bundling infrastructure procurement: Evidence from water supply and sewage projects

Antonio Estache and Atsushi Iimi

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: 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. © 2011 Elsevier Ltd.

Keywords: Auction theory; Governance; Infrastructure development; Public procurement (search for similar items in EconPapers)
Date: 2011-06
Note: SCOPUS: ar.j
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Published in: Utilities policy (2011) v.19 n° 2,p.104-114

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: (Un)bundling infrastructure procurement: Evidence from water supply and sewage projects (2011) Downloads
Working Paper: (Un)Bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects (2009) Downloads
Working Paper: (UN)Bundling infrastructure procurement: evidence from water supply and sewage projects (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/169498

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/169498

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().

 
Page updated 2025-03-30
Handle: RePEc:ulb:ulbeco:2013/169498