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On the Separation of Award and Contract in Public Procurement

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  • Dieter Bös
  • Martin Kolmar

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 imperfect procurement contracts such a separation may increase efficiency. Efficiency can be increased by postaward, pre-contract negotiations between the award-winning firm and one of the losing firms. 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.

Suggested Citation

  • Dieter Bös & Martin Kolmar, 2002. "On the Separation of Award and Contract in Public Procurement," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(4), pages 425-442, December.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(2002/200312)59:4_425:otsoaa_2.0.tx_2-i
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    More about this item

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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