<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper explores the effect of various contract-awarding procedures in public procurement on the price of the contract. We provide a theoretical model that compares prices in different procedures and tests whether there is a significant price difference between the procedures using data from Czech public procurement. The model predicts that auctions are more efficient than negotiations given the same number of suppliers, and open procedures are more efficient than closed procedures if high-cost firms are selected for the closed procedure. In accordance with the first prediction, we find that open auctions are more efficient than open negotiations. Concerning the second prediction, we find that closed procedures are less efficient than open procedures, which suggests that procurers tend to select relatively more costly firms to participate in closed procedures. Comparing all four awarding procedures, we find that open auctions are the most efficient procedure used in the Czech Republic. We estimate that the inefficiencies due to the use of other contract-awarding procedures are substantial.</p></abstract>

This paper explores the effect of various contract-awarding procedures in public procurement on the price of the contract. We provide a theoretical model that compares prices in different procedures and tests whether there is a significant price difference between the procedures using data from Czech public procurement. The model predicts that auctions are more efficient than negotiations given the same number of suppliers, and open procedures are more efficient than closed procedures if high-cost firms are selected for the closed procedure. In accordance with the first prediction, we find that open auctions are more efficient than open negotiations. Concerning the second prediction, we find that closed procedures are less efficient than open procedures, which suggests that procurers tend to select relatively more costly firms to participate in closed procedures. Comparing all four awarding procedures, we find that open auctions are the most efficient procedure used in the Czech Republic. We estimate that the inefficiencies due to the use of other contract-awarding procedures are substantial.

Do Auctions Improve Public Procurement? Evidence from the Czech Republic

Department of Economics, Faculty of Economics and Administration, Masaryk University, Lipová 41a, 602 00 Brno, Czech Republic.

DANUBE

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Do Auctions Improve Public Procurement? Evidence from the Czech Republic"}

This paper explores the effect of various contract-awarding procedures in public procurement on the price of the contract. We provide a theoretical model that...

Do Auctions Improve Public Procurement? Evidence from the Czech Republic

Published Online: Jan 06, 2016

Page range: 241 - 257

DOI: https://doi.org/10.1515/danb-2015-0015

Keywords
Auctions, Negotiations, Public Procurement, Contract-awarding Procedures

© 2015 Michal Kvasnička et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Do Auctions Improve Public Procurement? Evidence from the Czech Republic

Published Online: Jan 06, 2016

Page range: 241 - 257

DOI: https://doi.org/10.1515/danb-2015-0015

KeywordsAuctions, Negotiations, Public Procurement, Contract-awarding Procedures

© 2015 Michal Kvasnička et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Auctions, Negotiations, Public Procurement, Contract-awarding Procedures