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Corruption In Public Contracting Auctions: The Role Of Transparency In Bidding Processes

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  • Frédéric Boehm
  • Juanita Olaya

Abstract

ABSTRACT**: The paper discusses corruption in public auctions and the role of transparency as a tool to prevent it. First, we analyse where corruption occurs, emphasizing the importance of considering the whole process, from deciding whether to contract‐out to implementing the contract. We then analyse the effects of corruption on public auctions and argue that corruption undermines their stated aims. Second, we discuss the ways transparency can mitigate corruption and possible trade‐offs regarding competition and efficiency. As an instrument, we focus on the Integrity Pact, a tool developed by Transparency International, and analyse cases in Argentina (school supplies) and Colombia (telecommunications), where transparency helped to prevent corruption and collusion and, furthermore, was able to enhance competition. We conclude with some policy implications.

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  • 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.
    • Handle: RePEc:bla:annpce:v:77:y:2006:i:4:p:431-452
    DOI: 10.1111/j.1467-8292.2006.00314.x
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    References listed on IDEAS

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    1. 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.
    2. Paul Klemperer, 2004. "Survey of Auction Theory, from Auctions: Theory and Practice," Introductory Chapters, in: Auctions: Theory and Practice, Princeton University Press.
    3. Roberto Burguet & Yeon-Koo Che, 2004. "Competitive Procurement with Corruption," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 50-68, Spring.
    4. Ariane Lambert‐Mogiliansky & Konstantin Sonin, 2006. "Collusive Market Sharing and Corruption in Procurement," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(4), pages 883-908, December.
    5. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
    6. Celentani, Marco & Ganuza, Juan-Jose, 2002. "Corruption and competition in procurement," European Economic Review, Elsevier, vol. 46(7), pages 1273-1303, July.
    7. Paul Klemperer, 2004. "Introduction to Auctions: Theory and Practice," Introductory Chapters, in: Auctions: Theory and Practice, Princeton University Press.
    8. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
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