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Regulation and Competition in Public Procurement

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  • Drake, Samielle

    (Department of Economics, Umeå University)

  • Xu, Fei

    (Department of Economics, Umeå University)

Abstract

We examine, theoretically and empirically, the impacts of regulation on optimal bids and competition in public procurement depending on whom the regulation is imposed on. We show that regulation imposed solely on the winner of a procurement contract increases competition whereas regulation imposed on all potential bidders reduces competition. Both types of regulation raise bids in equilibrium. Furthermore, the expected outcomes of regulation depend on its enforceability as bidders adjust their optimal bids and the delivery of the contracts accordingly. Finally, the model’s theoretical implications are supported by behaviours observed in public procurement of cleaning services in Sweden.

Suggested Citation

  • Drake, Samielle & Xu, Fei, 2023. "Regulation and Competition in Public Procurement," Umeå Economic Studies 1013, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:1013
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    References listed on IDEAS

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    More about this item

    Keywords

    Public Procurement; Regulation; Competition; Optimal Bids;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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