Corruption in Public Procurement Auctions

Download or read book Corruption in Public Procurement Auctions written by Maria Monica Wihardja and published by . This book was released on 2009 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a positive analysis of the equilibrium bidding and bribing strategies with and without corruption in a first-price, sealed-bid, procurement auction with two-dimensional-type bidders. With corruption, we assume that the quality of the bidders are unobservable and non-contractible ex-post. We show examples of equilibrium bids and bribes of N two-dimensional-type bidders in an incomplete information game where the type space is discrete and strategy space is infinite. The equilibrium bid and bribe decrease in the number of bidders. Moreover, we show that in this auction with corruption, quality is randomly chosen, constraining efficiency. In fact, no mechanism can be efficient in this auction. The empirical study suggests that increasing the number of bidders increases the percentage cost efficiency at a decreasing rate and it starts to decrease the percentage cost efficiency after it reaches a certain number of bidders.