Favoring domestic firms in procurement contracts

Fernando Branco*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

66 Citations (Scopus)

Abstract

This paper studies the rationale for giving preference to domestic firms in the award of government contracts when the regulator is interested in maximizing domestic welfare. It is seen that, in the absence of comparative advantages, the regulator should discriminate in favor of the domestic firms, because foreign firms' profits do not enter in domestic welfare. Furthermore, I show that the form of the discrimination function depends on the mechanism being used. In order to simplify the implementation of an optimal policy, the regulator should choose mechanisms based on second price auctions.

Original languageEnglish
Pages (from-to)65-80
Number of pages16
JournalJournal of International Economics
Volume37
Issue number1-2
DOIs
Publication statusPublished - Aug 1994

Keywords

  • Auctions
  • Procurement
  • Protection

Fingerprint

Dive into the research topics of 'Favoring domestic firms in procurement contracts'. Together they form a unique fingerprint.

Cite this