A Contest Model of Liberalizing Government Procurements
AbstractThis paper models government procurements as a contest among domestic firms, and - in case of liberalization - domestic and foreign firms. Liberalizing procurements reduces wasteful domestic lobbying but also increases the likelihood that a foreign firm will capture the rent. We show that the domestic welfare change is not monotonic in the foreign firmsÕ abilities. Domestic welfare increases only if the gross surplus generated by foreign firms is sufficiently large. Furthermore, we show that, from the global welfare point of view, domestically optimal liberalization policies can be either excessive or too restrictive.
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Bibliographic InfoPaper provided by University of Otago, Department of Economics in its series Working Papers with number 0803.
Length: 20 pages
Date of creation: Jan 2008
Date of revision: Jan 2008
Trade liberalization; trade in services; government procurements.;
Other versions of this item:
- Long, Ngo Van & Stähler, Frank, 2009. "A contest model of liberalizing government procurements," European Journal of Political Economy, Elsevier, vol. 25(4), pages 479-488, December.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
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