Corruption and Renegotiation in Procurement

A sponsor –e.g. a government agency– uses a procurement auction to select a supplier who will be in charge of the execution of a contract. That contract is incomplete: it may be renegotiated once the auction’s winner has been chosen. We examine a setting where one firm may bribe the agent in char...

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Detalles Bibliográficos
Autores principales: Arozamena, Leandro, Ganuza, Juan José, Weinschelbaum, Federico
Formato: Documento de trabajo acceptedVersion
Lenguaje:Inglés
Publicado: RedNIE Red Nacional de Investigadores en Economía 2024
Materias:
Corruption
Corrupción
Contratos
Contracts
Auctions
Cost overruns
Renegotiation
Acceso en línea:https://repositorio.utdt.edu/handle/20.500.13098/13129
Aporte de:
Repositorio Digital Universidad Torcuato Di Tella de Universidad Torcuato Di Tella
id I57-R163-20.500.13098-13129
record_format dspace
spelling I57-R163-20.500.13098-131292024-11-02T07:00:11Z Corruption and Renegotiation in Procurement Arozamena, Leandro Ganuza, Juan José Weinschelbaum, Federico Corruption Corrupción Contratos Contracts Auctions Cost overruns Renegotiation A sponsor –e.g. a government agency– uses a procurement auction to select a supplier who will be in charge of the execution of a contract. That contract is incomplete: it may be renegotiated once the auction’s winner has been chosen. We examine a setting where one firm may bribe the agent in charge of monitoring contract execution so that the former is treated preferentially if renegotiation actually occurs. If a bribe is accepted, the corrupt firm will be more aggressive at the initial auction and thus win with a larger probability. We show that the equilibrium probability of corruption is larger when the initial contract is less complete, and when the corrupt firm’s cost is more likely to be similar to her rivals’. In addition, we examine how this influences the sponsor’s incentives when designing the initial contract. Este documento fue publicado por la Red Nacional de Investigadores en Economía (RedNIE) Documento de Trabajo 334 2024-11-01T16:47:17Z 2024-11-01T16:47:17Z 2024-08 info:eu-repo/semantics/workingPaper info:eu-repo/semantics/acceptedVersion https://repositorio.utdt.edu/handle/20.500.13098/13129 eng RedNIE | Red Nacional de Investigadores en Economía info:eu-repo/semantics/openAccess https://creativecommons.org/licenses/by-sa/2.5/ar/ 17 application/pdf application/pdf RedNIE Red Nacional de Investigadores en Economía
institution Universidad Torcuato Di Tella
institution_str I-57
repository_str R-163
collection Repositorio Digital Universidad Torcuato Di Tella
language Inglés
orig_language_str_mv eng
topic Corruption
Corrupción
Contratos
Contracts
Auctions
Cost overruns
Renegotiation
spellingShingle Corruption
Corrupción
Contratos
Contracts
Auctions
Cost overruns
Renegotiation
Arozamena, Leandro
Ganuza, Juan José
Weinschelbaum, Federico
Corruption and Renegotiation in Procurement
topic_facet Corruption
Corrupción
Contratos
Contracts
Auctions
Cost overruns
Renegotiation
description A sponsor –e.g. a government agency– uses a procurement auction to select a supplier who will be in charge of the execution of a contract. That contract is incomplete: it may be renegotiated once the auction’s winner has been chosen. We examine a setting where one firm may bribe the agent in charge of monitoring contract execution so that the former is treated preferentially if renegotiation actually occurs. If a bribe is accepted, the corrupt firm will be more aggressive at the initial auction and thus win with a larger probability. We show that the equilibrium probability of corruption is larger when the initial contract is less complete, and when the corrupt firm’s cost is more likely to be similar to her rivals’. In addition, we examine how this influences the sponsor’s incentives when designing the initial contract.
format Documento de trabajo
acceptedVersion
author Arozamena, Leandro
Ganuza, Juan José
Weinschelbaum, Federico
author_facet Arozamena, Leandro
Ganuza, Juan José
Weinschelbaum, Federico
author_sort Arozamena, Leandro
title Corruption and Renegotiation in Procurement
title_short Corruption and Renegotiation in Procurement
title_full Corruption and Renegotiation in Procurement
title_fullStr Corruption and Renegotiation in Procurement
title_full_unstemmed Corruption and Renegotiation in Procurement
title_sort corruption and renegotiation in procurement
publisher RedNIE Red Nacional de Investigadores en Economía
publishDate 2024
url https://repositorio.utdt.edu/handle/20.500.13098/13129
work_keys_str_mv AT arozamenaleandro corruptionandrenegotiationinprocurement
AT ganuzajuanjose corruptionandrenegotiationinprocurement
AT weinschelbaumfederico corruptionandrenegotiationinprocurement
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