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Corruption in procurement and public purchase

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  • Auriol, Emmanuelle

Abstract

The paper studies the impact of corruption threat in procurement an dpublic purchases. It explores the consequences of the unobservability of people integrity and considers the problem of both capture and extortion. It shows that extortion is not fight against because it is not harmful to the principal, contrary to capture which is costly. This distinction implies that when corruptibility increases among the population the optimal answer of the organization is to shift from a capture regime to an extortion regime.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 24 (2006)
Issue (Month): 5 (September)
Pages: 867-885

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Handle: RePEc:eee:indorg:v:24:y:2006:i:5:p:867-885

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Web page: http://www.elsevier.com/locate/inca/505551

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References

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  1. Lambert-Mogiliansky, Ariane, 1997. "Regulatory blackmail in procurement relationships," CEPREMAP Working Papers (Couverture Orange) 9701, CEPREMAP.
  2. Hindriks, J. & Keen, M. & Muthoo, A., 1996. "Corruption, Extortion and Evasion," Papers 179, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  3. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
  4. Emmanuelle Auriol, 1996. "Une note sur l'effet d'échantillonnage," Revue Économique, Programme National Persée, vol. 47(5), pages 1179-1201.
  5. Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
  6. Kofman, Fred & Lawarree, Jacques, 1996. "A prisoner's dilemma model of collusion deterrence," Journal of Public Economics, Elsevier, vol. 59(1), pages 117-136, January.
  7. Auriol, Emmanuelle & Laffont, Jean-Jacques, 1992. "Regulation by Duopoly," IDEI Working Papers 20, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
  9. Kofman, Fred & Lawarree, Jacques, 1993. "Collusion in Hierarchical Agency," Econometrica, Econometric Society, vol. 61(3), pages 629-56, May.
  10. Domberger, Simon & Hall, Christine & Li, Eric Ah Lik, 1995. "The Determinants of Price and Quality in Competitively Tendered Contracts," Economic Journal, Royal Economic Society, vol. 105(433), pages 1454-70, November.
  11. Bac, Mehmet, 1996. "Corruption and Supervision Costs in Hierarchies," Journal of Comparative Economics, Elsevier, vol. 22(2), pages 99-118, April.
  12. Hoekman, Bernard, 1998. "Using International Institutions to Improve Public Procurement," World Bank Research Observer, World Bank Group, vol. 13(2), pages 249-69, August.
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Citations

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Cited by:
  1. Auriol, Emmanuelle & Flochel, Thomas & Straub, Stéphane, 2011. "Public Procurement and Rent-Seeking: The Case of Paraguay," TSE Working Papers 11-224, Toulouse School of Economics (TSE).
  2. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2008. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," CEIS Research Paper 115, Tor Vergata University, CEIS, revised 14 Jul 2008.
  3. Ngo Van Long & Frank StŠhler, 2008. "A Contest Model of Liberalizing Government Procurements," Working Papers 0803, University of Otago, Department of Economics, revised Jan 2008.
  4. David Martimort & Stephane Straub, 2006. "Privatization and Changes in Corruption Patterns: The Roots of Public Discontent," ESE Discussion Papers 147, Edinburgh School of Economics, University of Edinburgh.
  5. Estache, Antonio & Iimi, Atsushi, 2008. "Procurement efficiency for infrastructure development and financial needs reassessed," Policy Research Working Paper Series 4662, The World Bank.
  6. Serena Brianzoni & Raffaella Coppier & Elisabetta Michetti, 2012. "A Growth Model with Corruption in Public Procurement: Equilibria and Policy Implications," Working Papers 68-2012, Macerata University, Department of Finance and Economic Sciences, revised Nov 2012.
  7. Martimort, David & Straub, Stéphane, 2009. "Infrastructure privatization and changes in corruption patterns: The roots of public discontent," Journal of Development Economics, Elsevier, vol. 90(1), pages 69-84, September.
  8. Anna D’Souza & Daniel Kaufmann, 2013. "Who bribes in public contracting and why: worldwide evidence from firms," Economics of Governance, Springer, vol. 14(4), pages 333-367, November.
  9. Ufere, Nnaoke & Perelli, Sheri & Boland, Richard & Carlsson, Bo, 2012. "Merchants of Corruption: How Entrepreneurs Manufacture and Supply Bribes," World Development, Elsevier, vol. 40(12), pages 2440-2453.
  10. Charles Kenny, William Savedoff, 2013. "Can Results-Based Payments Reduce Corruption?-Working Paper 345," Working Papers 345, Center for Global Development.

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