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Corruption and Incompetence in Public Procurement

Listed author(s):
  • Antonio Estache
  • Renaud Foucart

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.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers ECARES with number ECARES 2016-05.

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Length: 27 p.
Date of creation: Feb 2016
Publication status: Published by:
Handle: RePEc:eca:wpaper:2013/226224
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  1. Mattozzi, Andrea & Merlo, Antonio, 2008. "Political careers or career politicians?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 597-608, April.
  2. O. Compte & A. Lambert-Mogiliansky & T. Verdier, 2005. "Corruption and Competition in Procurement Auctions," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 1-15, Spring.
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  4. Auriol, Emmanuelle & Straub, Stéphane & Flochel, Thomas, 2016. "Public Procurement and Rent-Seeking: The Case of Paraguay," World Development, Elsevier, vol. 77(C), pages 395-407.
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  8. Kotakorpi, Kaisa & Poutvaara, Panu, 2011. "Pay for politicians and candidate selection: An empirical analysis," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 877-885, August.
  9. Andreas Peichl & Nico Pestel & Sebastian Siegloch, 2013. "The politicians’ wage gap: insights from German members of parliament," Public Choice, Springer, vol. 156(3), pages 653-676, September.
  10. Martin J. Osborne & Al Slivinski, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 65-96.
  11. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 85-114.
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  13. Myerson Roger B., 1993. "Effectiveness of Electoral Systems for Reducing Government Corruption: A Game-Theoretic Analysis," Games and Economic Behavior, Elsevier, vol. 5(1), pages 118-132, January.
  14. Auriol, Emmanuelle, 2006. "Corruption in procurement and public purchase," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 867-885, September.
  15. Stefano Gagliarducci & Tommaso Nannicini, 2013. "Do Better Paid Politicians Perform Better? Disentangling Incentives From Selection," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 369-398, 04.
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