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Procurement cartels and the fight against (outsider) bribing

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  • Burguet, Roberto
  • Iossa, Elisabetta
  • Spagnolo, Giancarlo

Abstract

We study the relationship between collusion and corruption in a stylized model of repeated procurement where the cost of reporting corrupt bureaucrats gives rise to a free riding problem. Cooperation among long-run (honest) firms alleviates free-riding in reporting. However, it also facilitates collusion in bidding by increasing the value of the collusive rent. In turn, bidding collusion facilitates cooperation in reporting by increasing the value of having honest bureaucrats, generating a trade-off between collusion and corruption.

Suggested Citation

  • Burguet, Roberto & Iossa, Elisabetta & Spagnolo, Giancarlo, 2024. "Procurement cartels and the fight against (outsider) bribing," European Journal of Political Economy, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:poleco:v:81:y:2024:i:c:s0176268024000089
    DOI: 10.1016/j.ejpoleco.2024.102506
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    References listed on IDEAS

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    More about this item

    Keywords

    Bribes; Cartels; Corruption; Free-riding;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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