An Economic Analysis of Debarment

Auriol, Emmanuelle and Søreide, Tina (2017) An Economic Analysis of Debarment. International Review of Law and Economics, 50. pp. 36-49.

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Official URL: http://tse-fr.eu/pub/31624

Abstract

With a view to reducing the consequences of corruption in public procurement, many governments have introduced debarment of suppliers found guilty of corrup- tion and some other forms of crime. This paper explores the market effects of debarment on public procurement. Debarment is found to make little difference in markets with high competition, while in markets with low competition it may deter corruption as long as firms value public procurement contracts in the future and there is a certain risk of being detected in corruption. On the other hand, debarment when it works has an anti-competitive effect, and this effect will contribute to facilitate collusion between suppliers. Debarment may work as a tool against collusion, but only if targeting one firm at the time (such as a ring-leader or the specific beneficiary when the collusion is detected) and not all the members of a cartel. If designed with an understanding of the market mechanisms at play, debarment can deter both collusion and corruption, thus improving the results of public procurement. If so, most current debarment regimes need modification.

Item Type: Article
Language: English
Date: 2017
Refereed: Yes
Uncontrolled Keywords: Debarment, Corruption, Collusion, Procurement
JEL codes: H57 - Procurement
K21 - Antitrust Law
K23 - Regulated Industries and Administrative Law
K42 - Illegal Behavior and the Enforcement of Law
L41 - Monopolization; Horizontal Anticompetitive Practices
Subjects: B- ECONOMIE ET FINANCE
Divisions: Toulouse School of Economics - TSE
Site: UT1
Date Deposited: 13 Apr 2017 08:16
Last Modified: 18 Oct 2017 15:11
OAI ID: oai:tse-fr.eu:31624
URI: http://publications.ut-capitole.fr/id/eprint/23708

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