Corruption in delegated public procurement auctions

Dastidar, Krishnendu Ghosh; Mukherjee, Diganta

doi:10.1016/j.ejpoleco.2014.05.003

Cited by 37 publications

(24 citation statements)

References 14 publications

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“…Given that public procurement accounts for on average 29% of total general government expenditure in OECD countries (2013 data) (OECD 2015), and closer to 50% of public spending in developing countries, these practices can cause serious damage to the economy and to public confidence in institutions. Favoritism in the allocation of public contracts can lead to higher prices, reduced value for money, the provision of low-quality or unsafe works, goods and services, and reduced competition (Bank 2016;Dastidar and Mukherjee 2014;Hessami 2014). It is also likely to harm democracy since, by distributing resources according to particularistic ties, partisan favoritism disadvantages parties that lack connections and thus weakens political competition (Stark and Vedres 2012).…”

Section: Introductionmentioning

confidence: 99%

Grand corruption and government change: an analysis of partisan favoritism in public procurement

Dávid-Barrett

Fazekas²

2019

Eur J Crim Policy Res

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Incoming governments sometimes abuse their power to manipulate the allocation of government contracts so as to buy loyalty from cronies. While scandals suggest such practices are relatively widespread, the extent of such partisan favoritism is difficult to measure and the conditions under which it flourishes under-theorized. Drawing on theory regarding the role of institutions as constraints on corruption, we identify three spheres of political influence over government contracting and show how elites can manipulate two of those spheres to increase their opportunities to influence the procurement process and minimize external accountability, facilitating the corrupt allocation of contracts to partisan allies. Using an innovative big data methodology, we then identify the effects of a change in government on procurement markets in two countries, Hungary and the United Kingdom, which differ in terms of political influence over these institutions. We find that politically-favored companies secure 50-60% of the central government contracting market in Hungary but only 10% in the UK.

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Section: Introductionmentioning

confidence: 99%

Grand corruption and government change: an analysis of partisan favoritism in public procurement

Dávid-Barrett

Fazekas²

2019

Eur J Crim Policy Res

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“…This practice is contrary to the public interest, because it does not guarantee that the best-performing company is awarded the contract. This is therefore likely to lead to inefficiency (Dal Bó & Rossi, 2007), lower service quality and extra service delivery costs (Dastidar & Mukherjee, 2014), which will ultimately be borne by users or by taxpayers (Rose-Ackerman, 1999;Tollison, 2012). In short, it adversely affects the expected social welfare of a contracting auction (Boehm & Olaya, 2006).…”

Section: Introductionmentioning

confidence: 99%

Weakening political connections by means of regulatory reform: Evidence from contracting out water services in Spain

et al. 2017

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One area of public policy where rent-seeking and favoritism is relatively common is the contracting out of public services. Private firms can improve their chances of obtaining contracts by bribing politicians or public servants and funding political parties. In the same vein, firms can gain access to policymakers by hiring influential former politicians -a practice commonly referred to as revolving-doors. In this paper, we use information from 922 privatizations of water services in Spanish municipalities between 1984 and 2016 and multinomial logistic regression techniques to study the association between specific firms securing contracts and the political parties ruling the municipalities. We find robust statistical evidence of an association between the Popular Party (Partido Popular or PP) and the firm Aqualia, part of the large Spanish holding company Fomento de Construcciones y Contratas (FCC), which is known to have funded the Popular Party. Furthermore, former PP politicians have been appointed to top positions in the FCC Board of Directors. However, this relationship weakened after the institutional reform of 2007 on public procurement and financing of political parties, which is empirically evaluated in this paper.

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“…20 Whenever the (DE) constraint does not bind and hence not restrict equilibrium effort, a higher δ has no impact on e A * . 21 Formally analyzing the problem of corruption in the contracting process with PMSCs could also yield very interesting results (for example building on Calzolari and Spagnolo, 2009;Dastidar and Mukherjee, 2014). However, we would have to extend the model and allow for agency problems within the government, which is beyond the scope of this paper.…”

Section: Multiple Agentsmentioning

confidence: 96%