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‘Contestability’ in Competitive Tendering and Contracting: A Critique

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  • Kuru Pancharatnam

Abstract

Academic and policy discourse about Competitive Tendering and Contracting (CTC) derives its intellectual legitimacy from the theory of contestable markets. Applying contestability to CTC implies that efficiency gains generated through the initial open tender are repeated at successive stages of tendering. This paper presents a theoretically and pragmatically grounded critique of the application of this theory to CTC by focusing on the Re-Opened Tender (ROT) stage. Working within the neo-classical economic paradigm, contestability will be shown to be constrained at ROT, resulting in the most inefficient and worst possible welfare outcome for the buyer.

Suggested Citation

  • Kuru Pancharatnam, 1999. "‘Contestability’ in Competitive Tendering and Contracting: A Critique," The Economic and Labour Relations Review, , vol. 10(1), pages 56-72, June.
    • Handle: RePEc:sae:ecolab:v:10:y:1999:i:1:p:56-72
    DOI: 10.1177/103530469901000104
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    References listed on IDEAS

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    1. Domberger, Simon & Jensen, Paul, 1997. "Contracting Out by the Public Sector: Theory, Evidence, Prospects," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 13(4), pages 67-78, Winter.
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