Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204725 
Year of Publication: 
2012
Series/Report no.: 
SITE Working Paper No. 14
Publisher: 
Stockholm School of Economics, Stockholm Institute of Transition Economics (SITE), Stockholm
Abstract: 
Based on my recent work with several co-authors this paper explores the relationship between discretion, reputation, competition and entry in procurement markets. I focus especially on public procurement, which is highly regulated for accountability and trade reasons. In Europe regulation constrains the use of past performance information to select contractors while in the US its use is encouraged. I present some novel evidence on the benefits of allowing buyers to use reputational indicators based on past performance and discuss the complementary roles of discretion and restricted competition in reinforcing relational/reputational forces, both in theory and in a new empirical study on the effects restricted rather than open auctions. I conclude reporting preliminary results form a laboratory experiment showing that reputational mechanisms can be designed to stimulate rather than hindering new entry.
Subjects: 
Accountability
Discretion
Entry
Incomplete contracts
Limited enforcement
Past performance
Procurement
Quality
Relational contracts
Reputation
Restricted auctions
JEL: 
H57
L14
L15
L24
Document Type: 
Working Paper

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