Corruption in multidimensional procurement auctions under asymmetry

Chandel, Shivangi and Sarkar, Shubhro (2023) Corruption in multidimensional procurement auctions under asymmetry. Economic Modelling, 120: 106187. ISSN 1873-6122

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Abstract

We examine corruption in first and second-score procurement auctions with two asymmetric bidders. We assume that an agent, who is known to be corrupt with some exogenously known probability, asks for a bribe from one of two bidders and promises to manipulate bids in return. Using a symmetric quasi-linear scoring rule, we show that the agent approaches the weaker bidder for a bribe for higher levels of bidder asymmetry in both auction formats. Our numerical simulations suggest that the procurer prefers the first-score auction when the agent colludes with the stronger bidder in the second-score auction. If the weaker bidder is favored, on the other hand, the buyer switches to the second-score auction when the probability of corruption is high. This is due to the agent’s limited ability to manipulate bids in favor of the weaker bidder in the second-score auction. Finally, neither auction mechanism is efficient in the presence of corruption.

Item Type: Article
Keywords: Auctions | Asymmetric Bidders | Corruption | Multidimensional Procurement
Subjects: Social Sciences and humanities > Social Sciences > Social Sciences (General)
JGU School/Centre: Jindal School of Government and Public Policy
Depositing User: Amees Mohammad
Date Deposited: 08 Jan 2023 09:35
Last Modified: 23 Feb 2023 05:30
Official URL: https://doi.org/10.1016/j.econmod.2022.106187
URI: https://pure.jgu.edu.in/id/eprint/5340

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