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What impact does antitrust intervention have on competition? The case of public drug procurement in Russia

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Author Info

  • Maria Ostrovnaya

    ()
    (Center for Institutional Studies at the National Research University Higher School of Economics)

  • Elena Podkolzina

    ()
    (Ph.D. in economics, Senior Researcher in the Center for Institutional Studies at the National Research University Higher School of Economics)

Abstract

In this paper we study antitrust intervention in long-term relationships between public procurer and his preferred supplier in one of the Russian regions. We presume that antitrust control of auctions held by affiliated procurer increases the risks of implementing long-term relationships with his preferred supplier. However we found out that after the intervention of antitrust agency the number of bidders in the auctions increased, but relative contract prices remained the same. We argue that procurer and preferred bidder invited firm with passive bidding strategy to decrease the risks of antitrust punishment. Thereby, antitrust intervention led to fake competition, but not to honest non-corrupt behavior in public auctions

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Bibliographic Info

Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 32/EC/2013.

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Length: 26 pages
Date of creation: 2013
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, July 2013, pages 1-26
Handle: RePEc:hig:wpaper:32/ec/2013

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Keywords: public auctions; antitrust policy; pharmaceuticals; Russia.;

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  1. Brannman, Lance & Klein, J Douglass & Weiss, Leonard W, 1987. "The Price Effects of Increased Competition in Auction Markets," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 24-32, February.
  2. Garicano, Luis & Kaplan, Steven N, 2001. "The Effects of Business-to-Business E-Commerce on Transaction Costs," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 463-85, December.
  3. Yokoo, Makoto & Sakurai, Yuko & Matsubara, Shigeo, 2004. "The effect of false-name bids in combinatorial auctions: new fraud in internet auctions," Games and Economic Behavior, Elsevier, vol. 46(1), pages 174-188, January.
  4. Frédéric Boehm & Juanita Olaya, 2006. "Corruption In Public Contracting Auctions: The Role Of Transparency In Bidding Processes," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(4), pages 431-452, December.
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