Speaker : Maria Ostrovnaya (National Research University of the Higher School of Economics, Moscow, Russia)

Maria Ostrovnaya is a PhD student at the National Research University Higher School of Economics (HSE, Moscow, Russia) working in the Public Procurement research group in the Center for Institutional Studies HSE. Her research interests include New Institutional Economics and Industrial Organization, especially competition policy and rent-seeking behavior in public procurement.

Authors :  Maria Ostrovnaya & Elena Podkolzina (National Research University of the Higher School of Economics, Moscow, Russia)

Abstract :Since the 2000s e-auctions have been actively used in public and private procurement in many countries. They are often organized by intermediaries – specialized e-platforms, which seem to raise price competition through increased transparency and lower participation costs. Meanwhile, it is not clear yet to what consequences e-auctions lead, if an e-platform is corrupt. In this paper we examine how a corrupt e-platform affects favoritism in public procurement. We have found that the impact of a corrupt e-platform on favoritism depends on characteristics of the preferred bidder. The model shows that if the preferred bidder carries out low costs, corruption of e-platform encourages favoritism. On the contrary, if the preferred bidder carries out high costs and meets the strict requirements of the public procurer, incentives for favoritism and the size of the bribe may decrease. Thus, corruption of e-platform replaces the corruption of the public procurer and the society can benefit from it.

Download the paper : Favoritism in Russian public procurement: does e-auction format matter