Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper deals with the problem of design specification in public procurement and provides a rationale for design misspecification. We propose a model in which the sponsor decides...

A procurement approach commonly used for construction projects involves paying a fixed price per unit conducted, i.e., unit price contracts. We develop an analytical model to study the optimal procurement quantity and monitoring intensity when the required quantities are uncertain. The optimum...

Raising the public administration's efficiency is, without any doubt, one of the greatest challenges nowadays in Brazil. The State's technical and allocative efficiency dimensions necessarily require efficiency of public agencies in the acquisition of inputs for their production and supply...

The paper studies competition for the market in a setting where incumbents (and, to a lesser extent, neighboring incumbents) benefit from a cost advantage. The paper first compares the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find that...

Raising the public administration's efficiency is, without any doubt, one of the greatest challenges nowadays in Brazil. The State's technical and allocative efficiency dimensions necessarily require efficiency of public agencies in the acquisition of inputs for their production and supply...

The paper studies competition for the market in a setting where incumbents (and, to a lesser extent, neighboring incumbents) benefit from a cost advantage. The paper first compares the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find that...

In the presence of cost uncertainty, limited liability introduces the possibility of default in procurement with its associated bankruptcy costs. When financial soundness is not perfectly observable, we show that incentive compatibility implies that financially less sound contractors are...

In this paper, we empirically assess the effects of the winner’s curse in auctions for road concession contracts. Such auctions are private- and common-value auctions, and they are on concession contracts which are incomplete contracts prone to pervasive renegotiations (Guasch 2004, Engel...

When procurement takes place in the presence of horizontally differentiated contractors, the design of the object being procured affects the resulting degree of competition. This paper highlights the interaction between the optimal procurement mechanism and the design choice. Contrary to...