“Going once, going twice, sold!”: A new look at the auction tilt in public procurement

Abstract

The paper examines the auction tilt phenomenon in public procurement in terms of the transaction mechanisms of governance. Arguments to develop the discussion on limits of using auctions expediency and consequences of their forced distribution in public sector procurement are proposed. The reasons for maintaining the auction tilt despite the recognition of this practice as vicious in some jurisdictions and its numerous criticisms in the literature are explained. Transaction cost theory tools helped identify the failures of theoretical ideas about the effectiveness of auctions as attempts to bring the governance mechanism closer to the market one. Using heuristic models within the framework of the theory of transaction costs, a mechanism has been demonstrated that promotes the sustainability of the practice of regulated procurement with an auction bias, which is ineffective for a wide class of goods (works, services).