Andrei Yakovlev 1, Oleg Vyglovskiy 1, Olga Demidova 1, Aleksandr Bashlyk 1
  • 1 National Research University Higher School of Economics, 20 Myasnitskaya Str., Moscow, 101000, Russian Federation

Honest and Opportunistic Incentives in Repeated Procurements: Empirical Analysis

2014. Vol. 18. No. 4. P. 538–562 [issue contents]
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.

Citation: Yakovlev A. (2014) Dobrosovestnoe i nedobrosovestnoe povedenie v povtoryayushchikhsya zakupkakh: empiricheskiy analiz [Honest and Opportunistic Incentives in Repeated Procurements: Empirical Analysis]. HSE Economic Journal, vol. 18, no 4 (in Russian)
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