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The law of small numbers: investigating the benefits of restricted auctions for public procurement

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  • Lisa Chever
  • Stéphane Saussier
  • Anne Yvrande-Billon

Abstract

A commonly accepted view in the academic literature is that dispensing with competition may only be beneficial when tendering complex contracts. However, restricted auctions are frequently used among EU member states to procure small contracts. In this article, we investigate this paradox. Using an original data set of 180 contracts used by a local public buyer of social housing between 2006 and 2009, we show that limiting competition may enable economies to be made on transaction costs while the most efficient bidders still come forward, and that abuses such as corruption or favouritism do not result. To our knowledge, this article is the first to shed light on the advantages of using restricted auctions when tendering small simple contracts.

Suggested Citation

  • Lisa Chever & Stéphane Saussier & Anne Yvrande-Billon, 2017. "The law of small numbers: investigating the benefits of restricted auctions for public procurement," Applied Economics, Taylor & Francis Journals, vol. 49(42), pages 4241-4260, September.
  • Handle: RePEc:taf:applec:v:49:y:2017:i:42:p:4241-4260
    DOI: 10.1080/00036846.2017.1279270
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    1. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588.
    2. Oecd, 2010. "Public Procurement in EU Member States - The Regulation of Contract Below the EU Thresholds and in Areas not Covered by the Detailed Rules of the EU Directives," SIGMA Papers 45, OECD Publishing.
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    1. repec:bla:annpce:v:88:y:2017:i:3:p:25-48 is not listed on IDEAS

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