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Measuring private transaction costs of public procurement: Case of the Czech Republic

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  • Luboš Dufek

    (Department of Public Finance, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic)

Abstract

In the Czech Republic ca. 13% of the GDP, is spent every year on public procurement. More money each year has to be spent by the contracting authorities and private subjects for the public procurement to even work. This paper focuses on measuring private transaction cost of public procurement in the Czech Republic. In the first section of this paper, we present data used for our analysis and methods used for achieving our goals. In the second section, we summarise the results. Average transaction cost of one proposal is CZK 22 489. Weighted average relative transaction cost is 0.25% of the contract value. We estimate the total transaction cost of public procurement in the Czech Republic to be almost six billion CZK, further we estimate possible cost reductions of these cost in the case of increased effectiveness to be between 500 million and CZK 1.84 billion. The market sector, contract prices, size of the firm and different types of contracting authorities have all a significant influence on the transaction cost. A comparison of our results to other empirical studies have been made and some interesting facts found out during research have been explained at the end of the second section.

Suggested Citation

  • Luboš Dufek, 2013. "Measuring private transaction costs of public procurement: Case of the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(2), pages 317-325.
    • Handle: RePEc:mup:actaun:actaun_2013061020317
    DOI: 10.11118/actaun201361020317
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    References listed on IDEAS

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    1. Patrick Bajari, 2001. "Comparing competition and collusion: a numerical approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(1), pages 187-205.
    2. Jan Pavel, 2010. "Analýza vlivu míry konkurence na cenu rozsáhlých staveb dopravní infrastruktury [The Analysis of the Relationship Between the Rate of Competition and the Prices of Large Transport Infrastructure Bu," Politická ekonomie, Prague University of Economics and Business, vol. 2010(3), pages 343-356.
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    Cited by:

    1. Olga N. Balaeva & Andrei A. Yakovlev & Yuliya D. Rodionova & Daniil M. Esaulov, 2018. "Public Procurement Transaction Costs: A Country-Level Assessment Based On Microdata," HSE Working papers WP BRP 20/PSP/2018, National Research University Higher School of Economics.
    2. Šumpíková Markéta & Ďurčeková Ina, 2019. "Transaction Costs, Outsourcing, and the Public Procurement Review Process in the Czech Republic and Slovakia," NISPAcee Journal of Public Administration and Policy, Sciendo, vol. 12(2), pages 233-250, December.

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