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The law of small numbers: investigating the benefits of restricted auctions for public procurement

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  • Lisa Chever
  • Stéphane Saussier
  • Anne Yvrande-Billon

Abstract

A commonly accepted view in the academic literature is that dispensing with competition may only be beneficial when tendering complex contracts. However, restricted auctions are frequently used among EU member states to procure small contracts. In this article, we investigate this paradox. Using an original data set of 180 contracts used by a local public buyer of social housing between 2006 and 2009, we show that limiting competition may enable economies to be made on transaction costs while the most efficient bidders still come forward, and that abuses such as corruption or favouritism do not result. To our knowledge, this article is the first to shed light on the advantages of using restricted auctions when tendering small simple contracts.

Suggested Citation

  • Lisa Chever & Stéphane Saussier & Anne Yvrande-Billon, 2017. "The law of small numbers: investigating the benefits of restricted auctions for public procurement," Applied Economics, Taylor & Francis Journals, vol. 49(42), pages 4241-4260, September.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:42:p:4241-4260
    DOI: 10.1080/00036846.2017.1279270
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    References listed on IDEAS

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    1. Steve Kelman, 1990. "Procurement and Public Management," Books, American Enterprise Institute, number 53122, September.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    3. Oecd, 2010. "Public Procurement in EU Member States - The Regulation of Contract Below the EU Thresholds and in Areas not Covered by the Detailed Rules of the EU Directives," SIGMA Papers 45, OECD Publishing.
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    Cited by:

    1. Oleksii Birulin & Sergei Izmalkov, 2022. "On advance payments in tenders with budget constrained contractors," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 733-762, December.
    2. Decio Coviello & Andrea Guglielmo & Giancarlo Spagnolo, 2015. "The Effect of Discretion on Procurement Performance," CEIS Research Paper 361, Tor Vergata University, CEIS, revised 17 Nov 2015.
    3. Yuanzhu Lu & Xundong Yin & Hu Zhang, 2023. "Does surround‐bidding corruption hurt procurers?," Manchester School, University of Manchester, vol. 91(4), pages 320-335, July.
    4. Fazekas,Mihály & Blum,Jurgen Rene, 2021. "Improving Public Procurement Outcomes : Review of Tools and the State of the Evidence Base," Policy Research Working Paper Series 9690, The World Bank.
    5. von Hobe, Cord-Friedrich & Musshoff, Oliver, 2021. "On the effectiveness of restricted tendering as a form of policy intervention on agricultural land markets," Land Use Policy, Elsevier, vol. 103(C).
    6. Elisabetta IOSSA & Stephane SAUSSIER, 2018. "Public Private Partnerships In Europe For Building And Managing Public Infrastructures: An Economic Perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 25-48, March.
    7. repec:bla:annpce:v:89:y:2018:i:1:p:25-48 is not listed on IDEAS
    8. Decio Coviello & Andrea Guglielmo & Giancarlo Spagnolo, 2018. "The Effect of Discretion on Procurement Performance," Management Science, INFORMS, vol. 64(2), pages 715-738, February.

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