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Public Procurement and Rent-Seeking: The Case of Paraguay

  • Auriol, Emmanuelle
  • Flochel, Thomas
  • Straub, Stéphane

A model of entrepreneurial choices in an economy with a corrupt public procurement sector is built, providing predictions along two main dimensions. First, corruption is more frequent in sectors where public institutions are large buyers. Second, firms favoured with corrupt contracts enjoy extra returns, so that procurement related activities attract the best entrepreneurs. A large scale microeconomic database, including all public procurement operations over a 4 year period in Paraguay, amounting annually to approximately 6% of the country’s GDP, is then used to corroborate these predictions.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 11-224.

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Date of creation: 18 Feb 2011
Date of revision: Mar 2015
Publication status: Published in World Development, vol. 77, janvier 2016, p. 395-407.
Handle: RePEc:tse:wpaper:24174
Contact details of provider: Phone: (+33) 5 61 12 86 23
Web page: http://www.tse-fr.eu/

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