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Public Procurement and Rent-Seeking: The Case of Paraguay

  • Auriol, Emmanuelle
  • Flochel, Thomas
  • Straub, Stéphane

A model of entrepreneurial choices in an economy with a corrupt public procurement sector is built, providing predictions along two main dimensions. First, corruption is more frequent in sectors where public institutions are large buyers. Second, firms favoured with corrupt contracts enjoy extra returns, so that procurement related activities attract the best entrepreneurs. A large scale microeconomic database, including all public procurement operations over a 4 year period in Paraguay, amounting annually to approximately 6% of the country’s GDP, is then used to corroborate these predictions.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8282.

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Date of creation: Mar 2011
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Handle: RePEc:cpr:ceprdp:8282
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  8. Straub, Stéphane, 2005. "Informal sector: The credit market channel," Journal of Development Economics, Elsevier, vol. 78(2), pages 299-321, December.
  9. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2009. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," American Economic Review, American Economic Association, vol. 99(4), pages 1278-1308, September.
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