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Are discriminatory procurement policies motivated by protectionism ?

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  • BRETON, Albert

    (Department of Economics – University of Toronto)

  • SALMON, Pierre

    (LATEC - CNRS URA 342 - Université de Bourgogne)

Abstract

When purchasing goods and services, governments often discriminate in favour of domestic suppliers. It is widely assumed that such behaviour is motivated by protectionism. Although this interpretation is sometimes valid, it is also puzzling. After reviewing some of the puzzles, the paper proposes an alternative explanation of preferential procurement based on the assumption that governmental buyers want to purchase goods and services at minimum cost, but must do this in a context in which, because of the presence of unverifiable services, contracts are necessarily incomplete. The paper argues that preferential purchasing can guarantee the efficient delivery of these unverifiable services.
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Suggested Citation

  • BRETON, Albert & SALMON, Pierre, 1995. "Are discriminatory procurement policies motivated by protectionism ?," LATEC - Document de travail - Economie (1991-2003) 1995-10, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
  • Handle: RePEc:lat:lateco:1995-10
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    References listed on IDEAS

    as
    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    2. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    3. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-1328, December.
    4. Klein, Benjamin & Murphy, Kevin M, 1988. "Vertical Restraints as Contract Enforcement Mechanisms," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 265-297, October.
    5. Gianluigi Galeotti & Albert Breton, 1986. "An Economic Theory of Political Parties," Kyklos, Wiley Blackwell, vol. 39(1), pages 47-65, February.
    6. Salmon, Pierre, 1987. "Decentralisation as an Incentive Scheme," Oxford Review of Economic Policy, Oxford University Press, vol. 3(2), pages 24-43, Summer.
    7. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    8. Williamson, Oliver E, 1991. "Economic Institutions: Spontaneous and Intentional Governance," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 159-187, Special I.
    9. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    10. Finsinger, Jorg, 1988. "Non-competitive and protectionist government purchasing behavior," European Economic Review, Elsevier, vol. 32(1), pages 69-80, January.
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    Cited by:

    1. Dimitri Mardas, 1999. "Tendering procedures and buy-national policies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(2), pages 189-203, May.
    2. Anirudh Shingal, 2015. "Econometric Analyses of Home Bias in Government Procurement," Review of International Economics, Wiley Blackwell, vol. 23(1), pages 188-219, February.
    3. Evenett, Simon J. & Hoekman, Bernard M., 2005. "Government procurement: market access, transparency, and multilateral trade rules," European Journal of Political Economy, Elsevier, vol. 21(1), pages 163-183, March.
    4. repec:idb:brikps:7123 is not listed on IDEAS
    5. repec:kap:iaecre:v:5:y:1999:i:2:p:189-203 is not listed on IDEAS
    6. Carlos Pimenta & Mario Pessoa & Marco Varea & Adriana Arosteguiberry & Mike Williams & Israel Fainboim Yaker & Claudiano de Albuquerque & José Adrián Vargas & Joseph Cavanagh & Benito Almudena Fernánd, 2015. "Public Financial Management in Latin America: The Key to Efficiency and Transparency," IDB Publications (Books), Inter-American Development Bank, number 90517 edited by Carlos Pimenta & Mario Pessoa, February.
    7. Michele Santoni, 2002. "Discriminatory Procurement Policy with Cash Limits," Open Economies Review, Springer, vol. 13(1), pages 27-45, January.
    8. Shingal, Anirudh, 2011. "Services procurement under the WTO's Agreement on Government Procurement: whither market access?," World Trade Review, Cambridge University Press, vol. 10(4), pages 527-549, October.
    9. MILE 02, Anirudh Shingal, 2012. "Exploring foreign market access in government procurement," Papers 305, World Trade Institute.
    10. Dengler, Benedikt & Hoekman, Bernard, 2018. "The WTO Government Procurement Agreement as a Commitment Device: A First Appraisal," CEPR Discussion Papers 13266, C.E.P.R. Discussion Papers.
    11. Dimitri Mardas, 2010. "Stabilization and Association Agreements (SAAs), Europe Agreements, and Public Procurement," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(3), pages 331-343, September.
    12. Naegelen, Florence & Mougeot, Michel, 1998. "Discriminatory public procurement policy and cost reduction incentives," Journal of Public Economics, Elsevier, vol. 67(3), pages 349-367, March.
    13. Hoekman, Bernard & Sanfilippo, Marco, 2018. "Firm performance and participation in public procurement: Evidence from Sub-Saharan Africa," CEPR Discussion Papers 12752, C.E.P.R. Discussion Papers.
    14. Pimenta, Carlos & Pessoa, Mario & Varea, Marco & Arosteguiberry, Adriana & Williams, Mike & Fainboim Yaker, Israel & De Albuquerque, Claudiano & Vargas, José Adrián & Cavanagh, Joseph & Fernández Beni, 2018. "Public Financial Management in Latin America: The Key to Efficiency and Transparency," IDB Publications (Books), Inter-American Development Bank, number 7123, December.
    15. Shingal, ANIRUDH, 2011. "Foreign market access in government procurement," MPRA Paper 32814, University Library of Munich, Germany.
    16. Andrea, Bastianin & Chiara F., Del Bo, 2019. "Procurement in Big Science Centres: politics or technology? Evidence from CERN," Working Papers 410, University of Milano-Bicocca, Department of Economics, revised 21 May 2019.
    17. Chiara Carboni & Elisabetta Iossa & Gianpiero Mattera, 2018. "Barriers towards foreign firms in international public procurement markets: a review," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 85-107, March.
    18. Chiara Carboni & Elisabetta Iossa & Gianpiero Mattera, 2017. "Barriers to Public Procurement: A Review and Recent Patterns in the EU," IEFE Working Papers 92, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    19. Bernard Hoekman, 2015. "International Cooperation on Public Procurement Regulation," RSCAS Working Papers 2015/88, European University Institute.
    20. Hoekman, Bernard, 1998. "Using International Institutions to Improve Public Procurement," World Bank Research Observer, World Bank Group, vol. 13(2), pages 249-269, August.

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