CInSt Research Seminar "Corrupt Reserve Prices": Elena Podkolzina (HSE University)

Abstract
Procurement auctions are often plagued by favoritism and rent-seeking behavior. We develop a new methodology to identify potential favoritism in public procurement auctions with reserve prices and apply it to Russian public purchases of gasoline in 2011-2013. Since the reserve price is set prior to the auction, it is independent of the identity of the winning seller in a fair and competitive auction. A procurer-seller pair is labeled as potentially corrupt if it exhibits consistently higher reserves prices than the average reserve price of this procurer. Sellers face less competition in auctions organized by procurers with whom they form a corrupt pair and have a higher probability of winning these auctions. Auctions with corrupt pairs also have higher final contract prices, implying considerable welfare losses. The inflationary effect of reserve price manipulation by corrupt procurer-seller pairs on final auction prices is mitigated by higher competition and fully offset by e-auctions with sufficient competition. 

Date: March 12th, 2019, 18:10-19:30.  
Location: K416, 11 Pokrovsky Boulevard, Moscow.
Working language: English.    
All welcome. If you don't have an HSE ID, please register before 2:00 PM on March 12th: cinst.hse.ru/register.