The effectiveness of simple homogeneous commodity procurement under rigid govermental regulation: the case of granulated sugar procurement in Russia
In the 2000s the Russian government considered electronic auctions (e-auctions) as the best way to procure goods for public needs. In this paper we confirm this proposition using an empirical dataset of contracts for the procurement of granulated sugar in Russia in 2011. Our data shows that unit prices are higher in the case of long-term contracts. This result can be explained by the rigidity of public procurement regulations as Russian legislation allows only fixed price contracts. Under these conditions suppliers can participate in public procurement tenders for long-term contracts only if their price includes a “risk premium” covering additional expenses of the supplier in case of an unfavorable turn in the market. Our analysis shows that sugar prices in Russian public procurement are lower for contracts with higher volume. These results are in the line with conclusions of previous studies of public procurement in other countries. The influence of competition measured by the number of suppliers participating in the procurement procedure has a quadratic form. It means that the effect of a new participant is lower when number of competitors is higher and vice versa. Our analysis also shows that there are essential distinctions in the influence of the same factors on contract prices for competitive procedures and void auctions
|Date of creation:||2014|
|Date of revision:|
|Publication status:||Published in WP BRP Series: Public Administration / PA, February 2014, pages 1-22|
|Contact details of provider:|| Postal: Myasnitskaya 20, Moscow 101000|
Web page: http://www.hse.ru/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rafael Lalive & Armin Schmutzler, 2011.
"Auctions vs negotiations in public procurement: which works better?,"
ECON - Working Papers
023, Department of Economics - University of Zurich.
- Lalive, Rafael & Schmutzler, Armin, 2011. "Auctions vs Negotiations in Public Procurement: Which Works Better?," CEPR Discussion Papers 8538, C.E.P.R. Discussion Papers.
- Rafael Lalive & Armin Schmutzler & Christine Zulehner, 2015. "Auctions vs negotiations in public procurement: which Works better?," ECON - Working Papers 209, Department of Economics - University of Zurich.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Robert H. Porter & J. Douglas Zona, 1992.
"Detection of Bid Rigging in Procurement Auctions,"
NBER Working Papers
4013, National Bureau of Economic Research, Inc.
- Ilya Morozov & Elena Podkolzina, 2013. "Collusion detection in procurement auctions," HSE Working papers WP BRP 25/EC/2013, National Research University Higher School of Economics.
- Robert H. Porter & J. Douglas Zona, 1997.
"Ohio School Milk Markets: An Analysis of Bidding,"
NBER Working Papers
6037, National Bureau of Economic Research, Inc.
- Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
- Patrick Bajari & Robert S. McMillan & Steve Tadelis, 2003.
"Auctions Versus Negotiations in Procurement: An Empirical Analysis,"
NBER Working Papers
9757, National Bureau of Economic Research, Inc.
- Steven Tadelis, 2009. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(2), pages 372-399, October.
- Patrick Bajari & Robert McMillan & Steven Tadelis, . "Auctions versus Negotiations in Procurement: An Empirical Analysis," Working Papers 02007, Stanford University, Department of Economics.
- AndréS GóMez-Lobo & Stefan Szymanski, 2001. "A Law of Large Numbers: Bidding and Compulsory Competitive Tendering for Refuse Collection Contracts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 105-113, February.
When requesting a correction, please mention this item's handle: RePEc:hig:wpaper:13/pa/2014. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamil Abdulaev)or (Victoria Elkina)
If references are entirely missing, you can add them using this form.