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Competitive conditions in the public procurement markets: an investigation with network analysis

Author

Listed:
  • Ioannis G. Fountoukidis

    (Aristotle University of Thessaloniki)

  • Ioannis E. Antoniou

    (Aristotle University of Thessaloniki)

  • Nikos C. Varsakelis

    (Aristotle University of Thessaloniki)

Abstract

The aim of this paper is to use network analysis as a monitoring tool for the competitive conditions and the behavior of the contracting authorities and companies in the public procurement market. The proposed method examines the market using network entropy and conditional network entropy, along with each agent's metrics. Network entropy offers information about the market conditions for the authorities and companies’ groups. The conditional network entropy measures the distribution of contracts across sellers or buyers for each group. The findings are signals of possible dominant positions and preferential treatment. In the second stage, the agency uses the agents’ degrees and entropies, unweighted and weighted, to inspect for possible preferential treatment or market dominance by specific agents. We applied the method in the pacemakers’ public procurement market using data from 33 countries from the period 2009–2019. The findings indicated that even though the network entropy and the conditional network entropy indicated that the market operated competitively, the examination of the companies’ degree centrality reveals the presence of at least one dominant company.

Suggested Citation

  • Ioannis G. Fountoukidis & Ioannis E. Antoniou & Nikos C. Varsakelis, 2023. "Competitive conditions in the public procurement markets: an investigation with network analysis," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 347-368, June.
    • Handle: RePEc:spr:epolin:v:50:y:2023:i:2:d:10.1007_s40812-022-00251-z
    DOI: 10.1007/s40812-022-00251-z
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    References listed on IDEAS

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    1. Oh, Yosep & Behdad, Sara, 2017. "Simultaneous reassembly and procurement planning in assemble-to-order remanufacturing systems," International Journal of Production Economics, Elsevier, vol. 184(C), pages 168-178.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
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    More about this item

    Keywords

    Public procurement market; Competition; Network analytics; Entropy;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy

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