Transaction costs in the Czech public procurement

According to the common opinion of experts (see for example Brannman, 1987; Gupta, 2002; Pavel, 2010) there exist several important factors determining the final result from the public procurement. These authors suggest that... [ view full abstract ]

According to the common opinion of experts (see for example Brannman, 1987; Gupta, 2002; Pavel, 2010) there exist several important factors determining the final result from the public procurement. These authors suggest that results of the public procurement process cannot be assessed only by savings achieved by the competition between potential suppliers (moreover, all such calculations are at least partly problematic). Existing academic literature clearly indicates that transaction costs on both sides (procurer and supplier) are significantly influencing not only public procurement results, but also the processes, for example the level of competitiveness, but also offered prices (Pavel, 2007).
The goal of our paper is the analysis of one selected aspects of transaction costs using available data from Czech reality. Two transaction costs elements on the side of the private sector are investigated – ex-ante direct costs to prepare bids and total indirect costs.