Template-Type: ReDIF-Paper 1.0
Title: Self-Correcting Mechanisms in Public Procurement: Why Award and
	Contract Should be Separated
Author-Name: Dieter Bös
Author-Name: Martin Kolmar
Classification-JEL: D23, H57, L51
Keywords: Procurement, Incomplete contracts, lobbying, corruption
Abstract: In public procurement a temporal separation of award and actual contracting can frequently be observed.
	In this paper we give an explanation for this institutional setting. For incomplete procurement contracts we show that such a
	separation may increase efficiency. We show that efficiency can be increased by
	post-award, pre-contract negotiations
	between the award-winning seller and one of the `losing' sellers. Surprisingly,
	the efficiency gains can be higher if the award
	is given to a seller with a lower reputation for quality instead of to a seller
	with higher reputation. Under certain conditions
	post-award, pre-contract rent-seeking activities also increase efficiency. This
	is always the case if the procurement agency
	is corrupt, but may also occur in the case of lobbying.
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File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse5_2000.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse5_2000