2014. vol. 18. No. 4

This paper analyzes the phenomenon of repeated procurements made by public sector customers from the same supplier. The previous studies of ‘relational contracting’ gave different explanations of the possible implications of such repeated procurements, but those studies dealt mostly with sophisticated goods with quality hardly verified at the time of delivery. This paper studies the impact of repeated procurements on the price of a simple homogeneous product of standard quality. We presume that the downward shift of the price of such product during repeated procurements as compared to the market average can be interpreted as an indication of bona fide behavior of a customer and supplier. An upward shift of the prices as compared to the market average can, on the contrary, be interpreted as an element of corrupt collusion between them. Using an empirical data on procurements of AI-92 gasoline in Russia in 2011, we show in the case of less transparent procedures (single-source contracting and request for quotations) used by the customer prices of repeated procurements were higher than the average price for the sample. Prices were relatively lower in cases of procurement through electronic auctions. Nevertheless, only one bidder participated in the overwhelming majority of auctions, and the overall level of prices of AI-92 gasoline in 2011 was 3% higher than in the retail market. This constitutes the evidence of serious imperfection of public procurement regulation in Russia during the period under survey.

It is believed that the price efficiency of public procurement depends on the number of bidders in competitive tender procedure. The more firms participate in the auction, the higher is the competition for the contract, and the higher is the probability that the winning firm will be efficient, i.e. will be able to sell the desired quantity of required goods with the lowest costs. In Russia the level of competition in public procurement remains very low. In this paper we try to find out, what are the factors that limit the competition for the public contracts, and analyze whether the low competition in the gasoline market leads to poor results of the public procurement procedures. Using the data on public procurement of gasoline in five Russian regions in 2011-2013, we show that number of bidders in a procedure depends on the clauses of the procurement, which are determined by a procurer, while price of the procurement depends in its turn on the number of bidders. We may conclude that clauses of the procurement and characteristics of the market structure may limit the competition for the contract and result in higher relative prices of the public contracts. It means that, ceteris paribus, preventing procurers from limiting the potential number of bidders, especially when market competition is already rather low, together with creating incentives for sellers to participate in public procurement, may lead to more efficient public procurement of goods with standard and verifiable quality.

Since the 2000s electronic auctions have been actively used in public and private procurement in many countries. They are often organized by intermediaries – specialized e-plat­forms, which seem to raise price competition between companies through increased transparency and lower participation costs. Meanwhile, it is not clear yet to what consequences e-auctions lead, if an e-platform is corrupt. In this paper we examine how a corrupt e-platform affects favoritism in public procurement using a theoretical model of reverse outcry auction and e-auction. In both auction formats a public procurer can restrict participation of companies by setting contract requirements that all companies may not execute. In addition to this, in e-auction intermediary can block actions (i.e. bids) of companies. Manipulation of contract requirements and blocking bids provide an opportunity for public procurer and intermediary, respectively, to take bribes. We show that even if participation costs have no effect on the decision of companies to enter the auction, e-auction with a corrupt intermediary may lead to lower possibilities for favoritism than outcry auction. If the preferred bidder carries out low production costs, corruption of e-platform encourages favoritism. On the contrary, if the preferred bidder carries out high production costs and meets the strict requirements of the public procurer, incentives for favoritism and the size of the bribe may decrease. Thus, corruption of e-platform replaces the corruption of the public procurer and the society can benefit from it.

The official poverty measurements in Russia are based on per capita welfare aggregate. We estimate economies on household size in consumption by different methodologies ranging from methods based on Engel curves to estimations of economies of scale using subjective questions. We demonstrate that, regardless of the method, larger households can reach a given level of wellbeing with less resource per capita compared to smaller households. The aggregate poverty estimates and composition of the poor derived with adjustments on household size will differ significantly from the Russian official statics. We suggest that Russian welfare programs might suffer from leakages and undercoverage because they overestimate the extent of poverty among large households. We also find that scale economies changed significantly from 1994 to 2011. Taking into account the economies of scale in household consumption might affect both size and a profile of the groups targeted by anti-poverty programs. The knowledge about scale economies at a point in time is crucial for poverty measurement and policy implementation. Moreover, as attention has shifted to targeting the antipoverty strategies at groups vulnerable to poverty, the reliable demographic poverty profiles hold considerable policy interest. The knowledge about dynamics of scale economies is useful for comparability of poverty profiles over time.

Gross exports accounting is a novel sub-area of research that seeks to allocate the value added in gross trade flows to its true country and sector of origin and country or sector of destination. Various frameworks have been recently proposed to perform such decompositions. This paper presents another effort to generalise the accounting framework so that it may be easily interpreted, customised and implemented in matrix computation software. The principal contribution is therefore a relatively simple way to derive the formulae for the decomposition of cumulative value added flows embodied in international trade. The underlying accounting approach is found to be largely similar to that of [Koopman et al., 2012; Stehrer, 2013], but the block matrix formulation allows the user to simultaneously decompose all bilateral flows at the country and/or sectoral level. The refined framework is applied to describe Russia’s export performance from the global value chain perspective using the data from the World Input-Output Database (WIOD) for 2000 and 2010. According to the findings, the countries that directly receive most of Russia’s exports are not exactly those that use most of Russia’s value added. Russia’s mining sector is found to be an intrinsic part of a complex downstream value chain where it indirectly contributes value to partner exports.