A contest model of liberalizing government procurements
AbstractThis paper models liberalization of government procurements as admitting entry of foreign firms in a contest among potential rent seekers. It contributes to the literature on how institutions influence socially desirable outcomes. Liberalizing procurements reduces wasteful domestic lobbying but also increases the likelihood that a foreign firm will capture the rent. A main result is that the domestic welfare change is not monotonic in the foreign firms' abilities. Furthermore, we show that domestic liberalization policies can be inefficient from the global point of view because foreign lobbying costs can outweight productive efficiency.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 25 (2009)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/505544
Trade liberalization Trade in services Government procurements;
Other versions of this item:
- 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.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
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