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The scope and limits of accounting and judicial courts intervention in inefficient public procurement

Estache, Antonio; Foucart, Renaud

Authors

Antonio Estache

Renaud Foucart



Abstract

Cost inefficiencies in public procurement tend to come from two sources: corruption (moral hazard) and incompetence (adverse selection). In most countries, audit authorities are responsible for monitoring costs but do not distinguish both sources of inefficiency in their audits. Judicial courts typically rely on these cost audits, but only sanction corruption. In a model of public procurement by politicians, we study how the respective quality of the two courts affects corruption as well as cost efficiency. We find that while better courts have the direct effect of decreasing corruption, they may have a negative indirect effect on the abilities of the pool of politicians, so that the net effect on cost efficiency is ambiguous.

Citation

Estache, A., & Foucart, R. (2018). The scope and limits of accounting and judicial courts intervention in inefficient public procurement. Journal of Public Economics, 157, https://doi.org/10.1016/j.jpubeco.2017.11.008

Journal Article Type Article
Acceptance Date Nov 30, 2017
Online Publication Date Dec 6, 2017
Publication Date Jan 31, 2018
Deposit Date Feb 6, 2018
Publicly Available Date Mar 28, 2024
Journal Journal of Public Economics
Print ISSN 0047-2727
Electronic ISSN 0047-2727
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 157
DOI https://doi.org/10.1016/j.jpubeco.2017.11.008
Keywords Moral hazard; Adverse selection; Procurement
Public URL https://nottingham-repository.worktribe.com/output/907727
Publisher URL https://doi.org/10.1016/j.jpubeco.2017.11.008

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