Chapter

The Government as Purchaser

Peter Trepte

in Regulating Procurement

Published in print December 2004 | ISBN: 9780198267751
Published online March 2012 | e-ISBN: 9780191683350 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198267751.003.0002
The Government as Purchaser

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Procurement regulation has been developed largely by societies which rely on concepts based on welfare economics in the market economy and is currently being adopted in societies which are embracing the market economy. How those societies respond to the laws of the market depends, to a large extent, on political factors. In the United States, for example, heavily influenced by free market principles, regulatory policy generally reflects the belief that the market works well under normal circumstances and should be interfered with only in specific cases of market failure. The development of procurement regulation within the market economy implies that its purpose is in some way an instrument of the pursuit of economic welfare. This chapter deals with allocative efficiency as well as market and institutional failures leading to conditions of imperfect competition which negatively affect economic efficiency (Pareto efficiency). It also discusses perfect competition, economic theory and procurement, agency theory, consequences for procurement regulation, transaction costs, and barriers to entry.

Keywords: procurement regulation; allocative efficiency; economic welfare; market economy; market failure; imperfect competition; economic theory; agency theory; transaction costs; competition

Chapter.  36848 words. 

Subjects: Constitutional and Administrative Law

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