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Auction Inefficiency and the Ways to Overcome Restrictions of Competition in Public Procurement

Maria Ostrovnaya, Elena Podkolzina*

Authors affiliation: Center for Institutional Studies,

National Research University Higher School of Economics (Moscow, Russia).

* Corresponding author, email: epodk@hse.ru.

Federal Antimonopoly Service (FAS) is responsible for controlling the level of competition in the Russian economy, in particular, in public procurement. Antitrust enforcement does not increase competition in this sphere and instead often leads to higher prices. In this article we analyze the reasons for favoritism in St. Petersburg drug procurement and main actions against restrictions of competition. We show that weak sanctions of the FAS cannot break illegal long-term relations between public procurer and affiliated bidder.

Keywords: antitrust enforcement, public procurement, public sector.

JEL: H57, L44.