In environments where regulations are lax and controls function badly, cleanly participating in tenders is irrational. An increase in one single firm’s propensity to bribe induces the same behaviour upon the others (“bad apple effect”), and the likelihood of firms to bribe tends to...

A number of papers in the theoretical auction literature show that the release of information regarding the seller’s valuation of an item can cause bidders to bid more aggressively. This widely accepted result in auction theory remains largely untested in the empirical literature. Recent...

This note examines the Integrity Pact (IP) methodology proposed by Transparency International to confront the problem of corruption in public procurement. The examination draws from a decision model for participants developed elsewhere, in which the critical elements are shown to be the...

The existence of a ‘bidding market’ is commonly cited as a reason to tolerate the creation or maintenance of highly concentrated markets. We discuss three erroneous arguments to that effect: the ‘consultants’ fallacy’ that ‘market power is impossible’, the ‘academics’...

This is an Invited paper for the World Congress of the Econometric Society held in Seattle in August 2000. We discuss the strong connections between auction theory and "standard" economic theory, and argue that auction-theoretic tools and intuitions can provide useful arguments and insights in a...

In this paper we analyse the dynamics of trade patterns in the six largest industrialised countries and in eight fast growing Asian economies. For each of these countries we study the shape of the sectoral distribution of an index of trade specialisation and its evolution over time. Our analysis...

We describe the relation between welfare growth and productivity growth. We argue that differences in productivity and productivity growth between sectors or countries are irrelevant from a policy perspective. Specialisation is based on the comparative advantages of countries. Since, by nature,...

We propose a dynamic general equilibrium model with human capital accumulation to evaluate the economic consequences of compulsory services (such as military draft or social services). Our analysis identifies a so far ignored dynamic cost arising from distortions in time allocation over the...

The prisoner’s dilemma is sometimes invoked to describe the situation facing participants in tenders. Reasoning on the basis of the dilemma metaphor, it is contended that agreeing not to bribe public officials in order to win contracts (collaboration) leads to better outcomes than bribing...

We look at a job-market model of bilateral uncertainty. Workers are uncertain about what job descriptions advertised by firms really mean and firms are uncertain about the qualifications of workers before they are interviewed. Both types of uncertainty can be resolved but both processes are...