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Prevention and detection in bribery-affected public procurement

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  • Claudio Weber Abramo

    (Transparencia Brasil)

Abstract

In environments where regulations are lax and controls function badly, cleanly participating in tenders is irrational. An increase in one single firm’s propensity to bribe induces the same behaviour upon the others (“bad apple effect”), and the likelihood of firms to bribe tends to uniformity. Competition unsettles the equilibrium, so that, ceteris paribus, the overall likelihood of bribing tends to a maximum determined by the control mechanisms. The factors affecting the expectation of public officials are the same, with the added feature that usually public officials have no rewards for not taking bribes. For both participants and agents, simple methods to empirically determine parameters and to evaluate whether or not bribery probably prevails in a given market are suggested. The system’s tendency to deteriorate points to policy strategies aimed at continuously perfecting the regulations and the control mechanisms. As the latter are expensive, it is argued that continuously acting on the regulations to diminish the opportunities for manipulation of conditions has a more profound effect on the overall efficiency of the system, including but beyond control of corruption.

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File URL: http://128.118.178.162/eps/pe/papers/0309/0309001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0309001.

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Length: 27 pages
Date of creation: 02 Sep 2003
Date of revision:
Handle: RePEc:wpa:wuwppe:0309001

Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on Any - A4; pages: 27 ; figures: included. 27 pages PDF
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Web page: http://128.118.178.162

Related research

Keywords: Control; corruption; public procurement; regulation;

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References

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  1. Han Hong & Matthew Shum, 2002. "Increasing Competition and the Winner's Curse: Evidence from Procurement," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 871-898.
  2. repec:wop:humbsf:2000-72 is not listed on IDEAS
  3. Lengwiler, Yvan & Wolfstetter, Elmar, 2000. "Auctions and corruption," SFB 373 Discussion Papers 2000,40, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  4. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  5. International Monetary Fund, 1997. "Corruption and the Rate of Temptation," IMF Working Papers 97/73, International Monetary Fund.
  6. Olivier Compte & Philippe Jehiel, 2002. "On the Value of Competition in Procurement Auctions," Econometrica, Econometric Society, vol. 70(1), pages 343-355, January.
  7. Juan J. Ganuza & Esther Hauk, 2000. "Economic integration and corruption: The corrupt soul of the European Union," Economics Working Papers 482, Department of Economics and Business, Universitat Pompeu Fabra.
  8. repec:wop:humbsf:2000-40 is not listed on IDEAS
  9. Han Hong, 2000. "Increasing Competition and the Winner's Curse: Evidence from Procurement," Econometric Society World Congress 2000 Contributed Papers 1628, Econometric Society.
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