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Are Discriminatory Procurement Policies Motivated by Protectionism?

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  • Breton, Albert
  • Salmon, Pierre

Abstract

When purchasing goods and services, governments often discriminate in favor of domestic suppliers. It is widely assumed that such behavior is motivated by protectionism. Although this interpretation is sometimes valid, it is also puzzling. After reviewing some of the puzzles, the paper proposes an alternative explanation of preferential procurement based on the assumption that governmental buyers want to purchase goods and services at minimum cost but must do this in a context in which, because of the presence of unverifiable services, contracts are necessarily incomplete. The paper argues that preferential purchasing can guarantee the efficient delivery of these unverifiable services. Copyright 1996 by WWZ and Helbing & Lichtenhahn Verlag AG

Suggested Citation

  • Breton, Albert & Salmon, Pierre, 1996. "Are Discriminatory Procurement Policies Motivated by Protectionism?," Kyklos, Wiley Blackwell, vol. 49(1), pages 47-68.
  • Handle: RePEc:bla:kyklos:v:49:y:1996:i:1:p:47-68
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    References listed on IDEAS

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Williamson, Oliver E, 1991. "Economic Institutions: Spontaneous and Intentional Governance," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 159-187, Special I.
    3. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    4. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    5. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    6. Salmon, Pierre, 1987. "Decentralisation as an Incentive Scheme," Oxford Review of Economic Policy, Oxford University Press, vol. 3(2), pages 24-43, Summer.
    7. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-1328, December.
    8. Klein, Benjamin & Murphy, Kevin M, 1988. "Vertical Restraints as Contract Enforcement Mechanisms," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 265-297, October.
    9. Finsinger, Jorg, 1988. "Non-competitive and protectionist government purchasing behavior," European Economic Review, Elsevier, vol. 32(1), pages 69-80, January.
    10. Galeotti, Gianluigi & Breton, Albert, 1986. "An Economic Theory of Political Parties," Kyklos, Wiley Blackwell, vol. 39(1), pages 47-65.
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    Cited by:

    1. Dimitri Mardas, 1999. "Tendering procedures and buy-national policies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(2), pages 189-203, May.
    2. Anirudh Shingal, 2015. "Econometric Analyses of Home Bias in Government Procurement," Review of International Economics, Wiley Blackwell, vol. 23(1), pages 188-219, February.
    3. Dimitri Mardas, 2010. "Stabilization and Association Agreements (SAAs), Europe Agreements, and Public Procurement," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(3), pages 331-343, September.
    4. Evenett, Simon J. & Hoekman, Bernard M., 2005. "Government procurement: market access, transparency, and multilateral trade rules," European Journal of Political Economy, Elsevier, vol. 21(1), pages 163-183, March.
    5. Shingal, ANIRUDH, 2011. "Foreign market access in government procurement," MPRA Paper 32814, University Library of Munich, Germany.
    6. repec:spr:epolin:v:45:y:2018:i:1:d:10.1007_s40812-017-0089-2 is not listed on IDEAS
    7. Michele Santoni, 2002. "Discriminatory Procurement Policy with Cash Limits," Open Economies Review, Springer, vol. 13(1), pages 27-45, January.
    8. Shingal, Anirudh, 2011. "Services procurement under the WTO's Agreement on Government Procurement: whither market access?," World Trade Review, Cambridge University Press, vol. 10(04), pages 527-549, October.
    9. Chiara Carboni & Elisabetta Iossa & Gianpiero Mattera, 2017. "Barriers to Public Procurement: A Review and Recent Patterns in the EU," IEFE Working Papers 92, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    10. Bernard Hoekman, 2015. "International Cooperation on Public Procurement Regulation," RSCAS Working Papers 2015/88, European University Institute.
    11. Naegelen, Florence & Mougeot, Michel, 1998. "Discriminatory public procurement policy and cost reduction incentives," Journal of Public Economics, Elsevier, vol. 67(3), pages 349-367, March.
    12. repec:kap:iaecre:v:5:y:1999:i:2:p:189-203 is not listed on IDEAS
    13. Shingal, Anirudh, 2012. "Exploring foreign market access in government procurement," Papers 305, World Trade Institute.
    14. Carlos Pimenta & Mario Pessoa & Marco Varea & Adriana Arosteguiberry & Mike Williams & Israel Fainboim Yaker & Claudiano de Albuquerque & José Adrián Vargas & Joseph Cavanagh & Benito Almudena Fernánd, 2015. "Public Financial Management in Latin America: The Key to Efficiency and Transparency," IDB Publications (Books), Inter-American Development Bank, number 90517 edited by Carlos Pimenta & Mario Pessoa, February.
    15. repec:idb:idbbks:7123 is not listed on IDEAS
    16. Hoekman, Bernard, 1998. "Using International Institutions to Improve Public Procurement," World Bank Research Observer, World Bank Group, vol. 13(2), pages 249-269, August.

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