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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 (Faculty of Economics, University of Tokyo)

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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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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-548.

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Length: 32 pages
Date of creation: Mar 2008
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Handle: RePEc:tky:fseres:2008cf548

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  1. Ariane Lambert-Mogiliansky & Konstantin Sonin, 2006. "Collusive Market Sharing and Corruption in Procurement," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 15(4), pages 883-908, December. [Downloadable!] (restricted)
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  2. O. Compte & A. Lambert-Mogiliansky & T. Verdier, 2005. "Corruption and Competition in Procurement Auctions," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 1-15, Spring.
  3. De Silva, Dakshina G. & Dunne, Timothy & Kankanamge, Anuruddha & Kosmopoulou, Georgia, 2008. "The impact of public information on bidding in highway procurement auctions," European Economic Review, Elsevier, vol. 52(1), pages 150-181, January. [Downloadable!] (restricted)
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  4. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer. [Downloadable!] (restricted)
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  5. Kenneth Hendricks & Robert Porter, 1989. "Collusion in Auctions," Discussion Papers 817, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  6. In Lee, 1999. "Non-cooperative Tacit Collusion, Complementary Bidding and Incumbency Premium," Review of Industrial Organization, Springer, vol. 15(2), pages 115-134, September. [Downloadable!] (restricted)
  7. Evenett, Simon J. & Hoekman, Bernard M., 2005. "International cooperation and the reform of public procurement policies," Policy Research Working Paper Series 3720, The World Bank. [Downloadable!]
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  8. 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, Blackwell Publishing, vol. 51(3), pages 295-316, 09. [Downloadable!] (restricted)
  9. Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 381-411, July.
  10. Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LP, vol. 4(3), pages 290-311, September. [Downloadable!]
  11. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Blackwell Publishing, vol. 23(1), pages 57-76, 01. [Downloadable!] (restricted)
  12. Atsushi Iimi, 2006. "Auction Reforms for Effective Official Development Assistance," Review of Industrial Organization, Springer, vol. 28(2), pages 109-128, 03. [Downloadable!] (restricted)
  13. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June. [Downloadable!] (restricted)
  14. 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. [Downloadable!] (restricted)
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