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Public Procurement Transaction Costs: A Country-Level Assessment Based On Microdata

Author

Listed:
  • Olga N. Balaeva
  • Andrei A. Yakovlev

    (National Research University Higher School of Economics)

  • Yuliya D. Rodionova
  • Daniil M. Esaulov

    (National Research University Higher School of Economics)

Abstract

Public procurement cost evaluation is important both for procurement optimization at the company level and for evaluating the public procurement regulatory system. This paper presents a survey-based methodological approach to public procurement cost evaluation at the macro level. Our approach is based on a methodology for assessing the efficiency of public procurement developed by PwC for the European Union. The PwC methodology was adapted to developing and transitional economies and piloted on Russian data. Average costs of each type of procurement procedure implemented in 2016 were evaluated. A regression analysis of factors impacting public procurement cost evaluation revealed considerable differences between respondents who have and do not have experience with complex procurement procedures. Although the average overall costs of public procurements in Russia amounted to about 1% of the total value of concluded contracts, the figure stands at 6.6–8.1% for small purchases. This exceeds the economy from price decreases and calls for a need to simplify regulation of such procurements.

Suggested Citation

  • Olga N. Balaeva & Andrei A. Yakovlev & Yuliya D. Rodionova & Daniil M. Esaulov, 2018. "Public Procurement Transaction Costs: A Country-Level Assessment Based On Microdata," HSE Working papers WP BRP 20/PSP/2018, National Research University Higher School of Economics.
  • Handle: RePEc:hig:wpaper:20/psp/2018
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    References listed on IDEAS

    as
    1. Marian W. Moszoro & Pablo T. Spiller, 2012. "Third-Party Opportunism and the Nature of Public Contracts," NBER Working Papers 18636, National Bureau of Economic Research, Inc.
    2. Costantino, N. & Dotoli, M. & Falagario, M. & Fanti, M. P. & Iacobellis, G., 2006. "Evaluating The Total Costs Of Purchasing Via Probabilistic And Fuzzy Reasoning," Fuzzy Economic Review, International Association for Fuzzy-set Management and Economy (SIGEF), vol. 0(1), pages 69-92, May.
    3. Susanne Büchner & Andreas Freytag & Luis González & Werner Güth, 2008. "Bribery and public procurement: an experimental study," Public Choice, Springer, vol. 137(1), pages 103-117, October.
    4. Laffont, Jean-Jacques & Tirole, Jean, 1991. "Auction design and favoritism," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 9-42, March.
    5. Marian Moszoro & Pablo T. Spiller & Sebastian Stolorz, 2016. "Rigidity of Public Contracts," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(3), pages 396-427, September.
    6. Natalia Dmitrieva & Sergey Plaksin & Lyaylya Sinyatullina, 2018. "The Main Approaches to the Assessment of Organizations Costs in the Statistic Collection and Provision," Public administration issues, Higher School of Economics, issue 2, pages 71-93.
    7. Olga Balaeva & Andrei Yakovlev, 2017. "Estimation of costs in the Russian public procurement system," International Journal of Procurement Management, Inderscience Enterprises Ltd, vol. 10(1), pages 70-88.
    8. Luboš Dufek, 2013. "Measuring private transaction costs of public procurement: Case of the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(2), pages 317-325.
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    More about this item

    Keywords

    public procurement; public procurement costs; public customers; suppliers.;
    All these keywords.

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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