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Public Procurement and Rent-Seeking: The Case of Paraguay

Author

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  • Auriol, Emmanuelle
  • Straub, Stephane
  • Flochel, Thomas
Abstract
A model of entrepreneurial choices in an economy with a corrupt public procurement sector is built, providing predictions along two main dimensions. First, corruption is more frequent in sectors where public institutions are large buyers. Second, firms favoured with corrupt contracts enjoy extra returns, so that procurement related activities attract the best entrepreneurs. A large scale microeconomic database, including all public procurement operations over a 4 year period in Paraguay, amounting annually to approximately 6% of the country?s GDP, is then used to corroborate these predictions.

Suggested Citation

  • Auriol, Emmanuelle & Straub, Stephane & Flochel, Thomas, 2011. "Public Procurement and Rent-Seeking: The Case of Paraguay," CEPR Discussion Papers 8282, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8282
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    More about this item

    Keywords

    Corruption; Development; Procurement; Rent-seeking;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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