Corruption in procurement and public purchase [An article from: International Journal of Industrial Organization]

This digital document is a journal article from International Journal of Industrial Organization, published by Elsevier in 2006. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
The paper studies capture and extortion in public purchase. It shows that capture yields a dead-weight loss while extortion does not. Based on the calibration of the model, the total cost of capture is between 1.2 and 2.88 times the amount of the bribes. The theoretical analysis focuses on capture fight. The legal framework that emerges from the normative analysis involves open tender for larger purchases and no monitoring for the smaller ones. The rule is independent of a country's characteristics. Large public purchases should hence be ruled by international legislation. For markets of medium range, national legislation differs. When susceptibility to corruption rises, there is a shift from the capture to the extortion regime.