Small business set-asides in procurement auctions: An empirical analysis
Small business set-asides in procurement auctions: An empirical analysis
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采购拍卖中的小企业预留:实证分析
DOI:
10.1016/j.jpubeco.2013.01.003
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发表时间:
2013
影响因子:
9.8
通讯作者:
Jun Nakabayashi
中科院分区:
文献类型:
--
作者:
Jun Nakabayashi
As part of public procurement, many governments adopt small business programs to provide contract opportunities for businesses often with preferences for firms operated by members of groups designated as disadvantaged. The redistribution arising from such programs, however, can introduce significant additional costs to government procurement budgets. In this paper, the extent to which small business set-asides increased government procurement costs is examined. The estimates employ data on Japanese public construction projects, where approximately half of the procurement budget is set aside for small and medium enterprises (SMEs). Applying a positive relationship between profitability and firm size obtained by the nonparametric estimation of an asymmetric first-price auction model with affiliated private values, a counterfactual analysis is undertaken to demonstrate that approximately 40percent of SMEs would exit the procurement market if set-asides were removed. Surprisingly, the resulting lack of competition would increase government procurement costs more than it would offset the production cost inefficiency.