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Corruption In Public Procurement Auctions: Positive Equilibrium Analysis, Incentive Mechanism Design, And Empirical Study

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  • Maria M. Wihardja

    (Centre of Strategic and International Studies, University of Indonesia)

Abstract

We study how poor quality of institution, such as corruption in public procurement auction, could hurt welfare. We show how competition effect could improve the cost-efficiency but not the quality of a public procurement auction with corruption. In fact, no incentive mechanism can be efficient in this auction if qualities are non-contractible. An empirical study suggests that increasing the number of bidders does increase the percentage cost efficiency albeit at a decreasing rate and decreases the percentage cost efficiency after it reaches a certain number of bidders.

Suggested Citation

  • Maria M. Wihardja, 2010. "Corruption In Public Procurement Auctions: Positive Equilibrium Analysis, Incentive Mechanism Design, And Empirical Study," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 35-57, March.
    • Handle: RePEc:jed:journl:v:35:y:2010:i:1:p:35-57
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    References listed on IDEAS

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    Cited by:

    1. Azmat Gani, 2012. "The Relationship Between Good Governance And Carbon Dioxide Emissions: Evidence From Developing Economies," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(1), pages 77-93, March.
    2. Krishnendu Ghosh Dastidar, 2014. "Scoring Auctions," Studies in Microeconomics, , vol. 2(1), pages 35-48, June.
    3. Pavlova, Natalia (Павлова, Наталья) & Meleshkina, Anna (Мелешкина, Анна), 2017. "Anti-Corruption and Protection of Competition [Противодействие Коррупции И Защита Конкуренции]," Working Papers 041707, Russian Presidential Academy of National Economy and Public Administration.
    4. Huang, He & Li, Zhipeng, 2015. "Procurement auctions with ex-ante endogenous bribery," Economic Modelling, Elsevier, vol. 47(C), pages 111-117.

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    More about this item

    Keywords

    Auctions; Procurement; Corruption;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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