The Influence of The State Purchaser on Competition in Public Procurement in Russia

Abstract

From the economic point of view, the competitive aspect of public procurement is a relatively poorly studied area of public procurement policy research, as economists tend to focus more on the problems of risk sharing, incentives formation, overcoming information asymmetry specific to public procurement. On the other hand, the study of public procurement from the perspective of supplier firms also receives limited attention, probably due to the fact that, from the economic point of view, their analysis belongs to the peripheral area of microeconomics, focusing on the analysis of monopsony and purchasing power of the state. This article attempts to characterize public procurement in terms of the specifics of the market structure of this quasi-market. As a premise of the analysis, it should be emphasized that a competitive analysis of the regulation of the state as buyer and its influence on the market cannot be properly conducted in situations where it is the only buyer (i.e., in purely "public markets") or where it has no significant market power (i.e., in purely private markets). And if the first situation is analyzed through the prism of sectoral regulation (because of the pure monopsony of the public buyer), in the second case the influence of public procurement is almost insignificant (because of the lack of purchasing power in the population) and is likely to remain below all thresholds of significance. The features of the public procurement market, where the state buyer dominates, having large-scale purchasing power and interacting with private markets are revealed; the consequences of his behavior are determined.