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Effects of Transparency in Procurement Practices on Government Expenditure: A Case Study of Municipal Public Works

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  • Hiroshi Ohashi

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Abstract

This paper examines the e?ect of improved transparency in the bidder quali.cation process, using the experience based on a case study of municipal public work auctions. It reveals that improved transparency reduces procurement cost by a maximum of three percent. This .nding is robust to the concerns of endogeneity, sample selectivity, and distributional assumptions. The bidding-function estimates, combined with features of Japanese procurement system, imply that the improved transparency limits abuse of auctioneer.s discretion, and thus weakens the stability of collusion among bidders.

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File URL: http://hdl.handle.net/10.1007/s11151-009-9208-1
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 34 (2009)
Issue (Month): 3 (May)
Pages: 267-285

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Handle: RePEc:kap:revind:v:34:y:2009:i:3:p:267-285

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: Public procurement; Transparency; Discretion; Difference-in-differences; F14; H57; L13;

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References

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  1. Atsushi Iimi, 2006. "Auction Reforms for Effective Official Development Assistance," Review of Industrial Organization, Springer, vol. 28(2), pages 109-128, 03.
  2. Dakshina De Silva & Timothy Dunne & Anuruddha Kankanamge & Georgia Kosmopoulou, 2005. "The Impact of Public Information on Bidding in Highway Procurement Auctions," Microeconomics 0511011, EconWPA.
  3. Robert H. Porter & J. Douglas Zona, 1992. "Detection of Bid Rigging in Procurement Auctions," NBER Working Papers 4013, National Bureau of Economic Research, Inc.
  4. Jun Nakabayashi, 2010. "Small Business Set-asides in Procurement Auctions: An Empirical Analysis," Global COE Hi-Stat Discussion Paper Series gd09-126, Institute of Economic Research, Hitotsubashi University.
  5. Evenett, Simon J & Hoekman, Bernard, 2004. "International Cooperation and the Reform of Public Procurement Policies," CEPR Discussion Papers 4663, C.E.P.R. Discussion Papers.
  6. John McMillan, 1991. "Dango: Japan'S Price-Fixing Conspiracies," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 201-218, November.
  7. Dakshina G. De Silva & Timothy Dunne & Georgia Kosmopoulou, 2003. "An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 295-316, 09.
  8. Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 381-411, July.
  9. Patrick Bajari & Lixin Ye, 2003. "Deciding Between Competition and Collusion," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 971-989, November.
  10. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, 01.
  11. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
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Citations

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Cited by:
  1. Atsushi Iimi, 2013. "Testing Low-Balling Strategy in Rural Road Procurement," Review of Industrial Organization, Springer, vol. 43(3), pages 243-261, November.
  2. Eiji Yamamura & Haruo Kondoh, 2012. "Government transparency and expenditure in the rent-seeking industry: The case of Japan for 1998–2004," EERI Research Paper Series EERI_RP_2012_13, Economics and Econometrics Research Institute (EERI), Brussels.
  3. Antonio Estache & A. Iimi, 2009. "(Un)Bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects," Working Papers ECARES 2009_007, ULB -- Universite Libre de Bruxelles.
  4. Iimi, Atsushi, 2013. "Multidimensional auctions for public energy efficiency projects : evidence from the Japanese ESCO market," Policy Research Working Paper Series 6485, The World Bank.
  5. Balsevich, A. & Pivovarova, S. & Podkolzina, E., 2012. "The Role of Information Transparency in Public Procurement: the Example of Russian Regions," Journal of the New Economic Association, New Economic Association, vol. 15(3), pages 82-112.
  6. Andrey Yakovlev & Andrey Tkachenko & Olga Demidova & Olga Balaeva, 2013. "An impact of different regulatory regimes on the effectiveness of public procurement," HSE Working papers WP BRP 08/PA/2013, National Research University Higher School of Economics.

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