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‘Sweet deals’: State-owned enterprises, corruption and repeated contracts in public procurement

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  • Tkachenko, Andrey
  • Yakovlev, Andrei
  • Kuznetsova, Aleksandra

Abstract

We show how a price analysis of stable relations between customer and supplier in the public procurement of homogeneous goods can help differentiate opportunistic from honest behaviour among economic agents. We consider two types of stable relations: repeated procurements and connections based on the state ownership of suppliers. On the basis of a large dataset on the procurement of granulated sugar in Russia from 2011 to 2013, we find that for private suppliers, prices of repeated contracts were lower compared to one-time deals when procured through more transparent procedures and higher when procured through non-transparent procedures. For non-transparent procedures, we observe significant overpricing of contracts with state-owned suppliers compared to private suppliers, especially in the case of repeated contracts, whereas for competitive e-auctions, there is only a small difference between the contract prices of state-owned suppliers and private suppliers.

Suggested Citation

  • Tkachenko, Andrey & Yakovlev, Andrei & Kuznetsova, Aleksandra, 2017. "‘Sweet deals’: State-owned enterprises, corruption and repeated contracts in public procurement," Economic Systems, Elsevier, vol. 41(1), pages 52-67.
    • Handle: RePEc:eee:ecosys:v:41:y:2017:i:1:p:52-67
    DOI: 10.1016/j.ecosys.2016.12.002
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    Cited by:

    1. Andrey Tkachenko & Paola Valbonesi & Elena Shadrina & Gegam Shagbazian, 2019. "Efficient design of set-aside auctions for small businesses: an empirical analysis," "Marco Fanno" Working Papers 0240, Dipartimento di Scienze Economiche "Marco Fanno".
    2. repec:prg:jnlpep:v:preprint:id:692:p:1-17 is not listed on IDEAS
    3. Michal Plaček & Martin Schmidt & František Ochrana & Milan Půček, 2019. "Factors Affecting the Length of Procedure in Public Procurement: The Case of the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(3), pages 313-329.
    4. Andrey V. Misyura, 2019. "High-tech industrial company: A normative and a positive approach to the definition," Journal of New Economy, Ural State University of Economics, vol. 20(4), pages 88-107, September.
    5. Tkachenko, Andrey, 2022. "State-business relations and access to external financing," BOFIT Discussion Papers 10/2022, Bank of Finland, Institute for Economies in Transition.
    6. Hoekman, Bernard & Onur Taş, Bedri Kamil, 2024. "Discretion and public procurement outcomes in Europe," European Journal of Political Economy, Elsevier, vol. 82(C).
    7. Tkachenko, Andrey, 2022. "State-business relations and access to external financing," BOFIT Discussion Papers 10/2022, Bank of Finland Institute for Emerging Economies (BOFIT).
    8. David Szakonyi, 2018. "Private Sector Policymaking," Working Papers 2018-8, The George Washington University, Institute for International Economic Policy.
    9. Nguyen, Bach, 2021. "Local institutions, external finance and investment decisions of small businesses in Vietnam," Economic Systems, Elsevier, vol. 45(3).
    10. Zemtsov, S. & Chernov, A., 2019. "What High-Tech Companies in Russia Grow Faster and Why?," Journal of the New Economic Association, New Economic Association, vol. 41(1), pages 68-99.
    11. Detkova, Polina & Tkachenko, Andrey & Yakovlev, Andrei, 2021. "Gender heterogeneity of bureaucrats in attitude to corruption: Evidence from list experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 217-233.
    12. Dennis Coates & Iuliia Naidenova & Petr Parshakov, 2019. "Determinants of governmental support of Russian companies: lessons on industrial policy, rent-seeking and corruption," Constitutional Political Economy, Springer, vol. 30(4), pages 438-466, December.
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    More about this item

    Keywords

    Public procurement; Corruption; Homogeneous good; State-owned enterprise; Repeated contract; Procurement procedure;
    All these keywords.

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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