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Corruption and Incompetence in Public Procurement

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  • Antonio Estache
  • Renaud Foucart

Abstract

We study a game where inefficiencies in public procurement managed by politicians comefrom two sources: corruption (moral hazard) and incompetence (adverse selection). We characterizethe respective impact of judicial and accounting courts on the cost effectiveness ofprocurement and the level of corruption. Although improving the quality of both courts mattersas a direct deterrent of corruption, it may also indirectly decrease the quality of the poolof politicians and hence deteriorates the cost efficiency of procurement.

Suggested Citation

  • Antonio Estache & Renaud Foucart, 2016. "Corruption and Incompetence in Public Procurement," Working Papers ECARES ECARES 2016-05, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/226224
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    References listed on IDEAS

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    More about this item

    Keywords

    moral hazard; adverse selection; procurement;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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