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Protection in government procurement auctions

Author

Listed:
  • Cole, Matthew T.
  • Davies, Ronald B.
  • Kaplan, Todd

Abstract

Discrimination against foreign bidders in procurement auctions has typically been achieved by price preferences. We demonstrate that in the bidding game, each level of protection via a price preference can be achieved by an equivalent tariff. When government welfare depends only on net expenditures, this equivalence carries over to the government's decision. As such, this equivalence provides a justification that agreements to eliminate price preferences to be taken in tandem with agreements to lower tariffs; e.g., the Government Procurement Agreement (GPA) in the broader context of the WTO.

Suggested Citation

  • Cole, Matthew T. & Davies, Ronald B. & Kaplan, Todd, 2017. "Protection in government procurement auctions," Journal of International Economics, Elsevier, vol. 106(C), pages 134-142.
  • Handle: RePEc:eee:inecon:v:106:y:2017:i:c:p:134-142
    DOI: 10.1016/j.jinteco.2017.03.003
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    References listed on IDEAS

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    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
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    5. Matthew T. Cole & Ronald B. Davies, 2014. "Foreign Bidders Going Once, Going Twice… Protection in Government Procurement Auctions," The Institute for International Integration Studies Discussion Paper Series iiisdp441, IIIS.
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    More about this item

    Keywords

    Government procurement; Tariffs; Price preference;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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