Citation

Discussion Paper Details

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Title: Corruption And Competition In Public Market Auctions

Author(s): Olivier Compte, Ariane Lambert-Mogiliansky and Thierry Verdier

Publication Date: April 2000

Keyword(s): Auction Procedures, Collusion, Controls and Corruption

Programme Area(s): Public Economics

Abstract: This paper investigates the effect of corruption on competition in government procurement auctions. Our assumption is that the bureaucrat (i.e. the agent that administers the market), if corrupt, may provide a favour in exchange for a bribe. The favour we consider in most of our analysis is the opportunity to readjust a bid. We show that a key effect of corruption is to facilitate collusion in price between firms. This can result in high public spending and inefficient allocation. We discuss the effect of other forms of bureaucratic discretion in the procurement process and analyse conditions under which unilateral anti-corruption controls may restore price competition.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2434

Bibliographic Reference

Compte, O, Lambert-Mogiliansky, A and Verdier, T. 2000. 'Corruption And Competition In Public Market Auctions'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2434