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Effects of Transparency in Procurement Practices on Government Expenditure: A Case Study of Municipal Public Works

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  • Hiroshi Ohashi

    (Faculty of Economics, University of Tokyo)

Abstract

This paper examines the e?ect of improved transparency in the bidder quali.cation process, using the experience based on a case study of municipal public work auctions. It reveals that improved transparency reduces procurement cost by a maximum of three percent. This .nding is robust to the concerns of endogeneity, sample selectivity, and distributional assumptions. The bidding-function estimates, combined with features of Japanese procurement system, imply that the improved transparency limits abuse of auctioneer.s discretion, and thus weakens the stability of collusion among bidders.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2008/2008cf548.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-548.

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Length: 32 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:tky:fseres:2008cf548
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Find related papers by JEL classification:
  • F14 - International Economics - - Trade - - - Empirical Studies of Trade
  • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
  • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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  1. Patrick Bajari & Lixin Ye, 2003. "Deciding Between Competition and Collusion," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 971-989, November.
  2. Federico Trionfetti, 2000. "Discriminatory Public Procurement and International Trade," The World Economy, Wiley Blackwell, vol. 23(1), pages 57-76, 01.
  3. Dakshina De Silva & Timothy Dunne & Anuruddha Kankanamge & Georgia Kosmopoulou, 2005. "The Impact of Public Information on Bidding in Highway Procurement Auctions," Microeconomics 0511011, EconWPA.
  4. Evenett, Simon J & Hoekman, Bernard, 2004. "International Cooperation and the Reform of Public Procurement Policies," CEPR Discussion Papers 4663, C.E.P.R. Discussion Papers.
  5. Atsushi Iimi, 2006. "Auction Reforms for Effective Official Development Assistance," Review of Industrial Organization, Springer, vol. 28(2), pages 109-128, 03.
  6. John McMillan, 1991. "Dango: Japan'S Price-Fixing Conspiracies," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 201-218, November.
  7. Martin Pesendorfer, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 381-411.
  8. Robert H. Porter & J. Douglas Zona, 1992. "Detection of Bid Rigging in Procurement Auctions," NBER Working Papers 4013, National Bureau of Economic Research, Inc.
  9. 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.
  10. Yoshiro Miwa & J. Mark Ramseyer, 2004. "Toward a Theory of Jurisdictional Competition: The Case of the Japanese FTC," CIRJE F-Series CIRJE-F-290, CIRJE, Faculty of Economics, University of Tokyo.
  11. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
  12. Jun Nakabayashi, 2010. "Small Business Set-asides in Procurement Auctions: An Empirical Analysis," Global COE Hi-Stat Discussion Paper Series gd09-126, Institute of Economic Research, Hitotsubashi University.
  13. 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.
  14. Dakshina G. De Silva & Timothy Dunne & Georgia Kosmopoulou, 2003. "An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 295-316, 09.
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Cited by:

  1. Andrey Yakovlev & Andrey Tkachenko & Olga Demidova & Olga Balaeva, 2013. "An impact of different regulatory regimes on the effectiveness of public procurement," HSE Working papers WP BRP 08/PA/2013, National Research University Higher School of Economics.
  2. Eiji Yamamura & Haruo Kondoh, 2012. "Government transparency and expenditure in the rent-seeking industry: The case of Japan for 1998–2004," EERI Research Paper Series EERI_RP_2012_13, Economics and Econometrics Research Institute (EERI), Brussels.
  3. Iimi, Atsushi, 2013. "Multidimensional auctions for public energy efficiency projects : evidence from the Japanese ESCO market," Policy Research Working Paper Series 6485, The World Bank.
  4. Atsushi Iimi, 2013. "Testing Low-Balling Strategy in Rural Road Procurement," Review of Industrial Organization, Springer, vol. 43(3), pages 243-261, November.
  5. In Lee, 1999. "Non-cooperative Tacit Collusion, Complementary Bidding and Incumbency Premium," Review of Industrial Organization, Springer, vol. 15(2), pages 115-134, September.
  6. Andrey V. Tkachenko & Andrei A. Yakovlev & Olga A. Demidova & Irina O. Volmenskikh, 2014. "The Effects Of Regulatory Reforms On Public Procurement: The Case Of A National University In Russia," HSE Working papers WP BRP 19/PA/2014, National Research University Higher School of Economics.
  7. Balsevich, A. & Pivovarova, S. & Podkolzina, E., 2012. "The Role of Information Transparency in Public Procurement: the Example of Russian Regions," Journal of the New Economic Association, New Economic Association, vol. 15(3), pages 82-112.
  8. Estache, Antonio & Iimi, Atsushi, 2011. "(Un)bundling infrastructure procurement: Evidence from water supply and sewage projects," Utilities Policy, Elsevier, vol. 19(2), pages 104-114, June.

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