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Corrupt reserve prices

Author

Listed:
  • Atmaca, Sümeyra
  • Schoors, Koen
  • Podkolzina, Elena

Abstract

We develop a methodology to identify favoritism in public procurement auctions with reserve prices and apply it to procurement of gasoline in Russia. As reserve prices are set prior to the auction, they should be independent of the winning seller’s identity in a fair and competitive auction. A procurer-seller pair with consistently higher unit reserve prices than the procurer’s average indicates potentially corrupt favoritism. In auctions involving such favoritist pairs, procurers limit entry, so that their favored sellers face less competition, are more likely to win, and enjoy higher price markups. Electronic open-bid auctions with sufficient competition offset these effects.

Suggested Citation

  • Atmaca, Sümeyra & Schoors, Koen & Podkolzina, Elena, 2025. "Corrupt reserve prices," European Journal of Political Economy, Elsevier, vol. 90(PB).
    • Handle: RePEc:eee:poleco:v:90:y:2025:i:pb:s0176268025001272
    DOI: 10.1016/j.ejpoleco.2025.102767
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    Cited by:

    1. is not listed on IDEAS
    2. S meyra Atmaca, 2020. "Application Period in Reverse Auctions," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 20/993, Ghent University, Faculty of Economics and Business Administration.

    More about this item

    Keywords

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    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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