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Видеозапись семинара "Favoritism in case of endogenous entry in public auctions"

Speaker: Maria Ostrovnaya (Lecturer at the Faculty of Economic Sciences, Research Fellow at the International Research Laboratory for Institutional Analysis of Economic Reforms, NRU HSE)

Co-author: Elena Podkolzina (Assistant Professor at the Faculty of Economic Sciences, Senior Research Fellow at the International Research Laboratory for Institutional Analysis of Economic Reforms, NRU HSE)

October 29, ThursdayMyasnitskaya 24, building 3, room 424, 17.30. 

Governments of different countries try to lower entry costs in public procurement in order to decrease pubic spending. Although corruption is one of the main factors that may intervene into this process, few studies research this link. The purpose of this paper is to examine how entry costs influence favoritism and procurement prices in the corrupt environment. We base on selective model of endogenous entry and find that lower entry costs always decrease the contract price paid by the benevolent procurer, but at the same time they make favoritism more stable. Thus entry costs do not affect the contract price paid by the corrupt procurer or, on the contrary, have positive impact on it. We illustrate this result using case study on gasoline procurement in Russia where reform decreased entry costs of companies and this allows us to examine how changed costs influence entry and contract prices in auctions.

Keywords: public procurement; endogenous entry; favoritism; e-auctions

Working paper: download