Competition and cost overruns. Optimal misspecification of procurement contracts

Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper deals with the problem of design specification in public procurement and provides a rationale for design misspecification. We propose a model in which the sponsor decides how much to invest in design specification and awards competitively the project to a contractor. After the project has been awarded the sponsor engages in bilateral renegotiation with the contractor, in order to accommodate changes in the initial project’s design that new information makes desirable. When procurement takes place in the presence of horizontally differentiated contractors, the design’s specification level is seen to affect the resulting degree of competition. The paper highlights this interaction between market competition and design specification and shows that the sponsor’s optimal strategy, when facing an imperfectly competitive market supply, is to underinvest in design specification so as to make significant cost overruns likely. Since no such misspecification occurs in a perfectly competitive market, cost overruns are seen to arise as a consequence of lack of competition in the procurement market.Cost overruns, procurement contracts, strategic ignorance

Allocating ideas: Horizontal competition in tournaments

We develop a stylized model of horizontal and vertical competition in tournaments with two competing firms. The sponsor cares about the quality of the design but also about the design location. A priori not even the sponsor knows his preferred design location, which is only discovered once he has seen the actual proposals. We show that the more efficient firm is more likely to be conservative when choosing the design location. Also, to get some differentiation in design locations, the cost difference between contestants can neither be too small nor too big. Therefore, if the sponsor mainly cares about the design location, participation in the tournaments by the two lowest cost contestants cannot be optimal for the sponsor.Horizontal and vertical competition, tournaments

Economic integration and corruption: The corrupt soul of the European Union

We study the link between corruption and economic integration. We show that if an economic union establishes a common regulation for public procurement, the country more prone to corruption benefits more from integration. However, if the propensities to corruption are too distinct, the less corrupt country will not be willing to join the union. This difference in corruption propensities can be offset by a difference in efficiency. We also show that corruption is lower if integration occurs. A panel data analysis for the European Union confirms that more corrupt countries are more favorable towards integration but less acceptable as potential new members.Corruption, procurement, economic integration

Corruption and competition in procurement

We consider a procurement problem in which the procurement agent is supposed to allocate the realization of a project according to a competitive mechanism that values bids in terms of the proposed price and quality. Potential bidders have private information about their production costs. Since the procurement agent is also in charge of verifying delivered quality, in exchange for a bribe, he can allow an arbitrary firm to be awarded the realization of the project and to produce a quality level lower than the announced. We compute the equilibrium level of corruption and we study the impact on corruption of the competitiveness of the environment, and in particular of: i) an increase in the number of potential suppliers of the good or service to be procured, ii) competitive (rather than collusive) behavior of procurement agents, and iii) an increase of competition in the market for procurement agents. We identify the effects that influence the equilibrium level of corruption and show that, contrary to conventional wisdom, corruption may well be increasing in competition.Corruption, competition, public procurement

Heterogeneity-promoting optimal procurement

When procurement takes place in the presence of horizontally differentiated contractors, the design of the object being procured affects the resulting degree of competition. This paper highlights the interaction between the optimal procurement mechanism and the design choice. Contrary to conventional wisdom, the sponsor's design choice, instead of homogenizing the market to generate competition, promotes heterogeneity.Procurement, project design, horizontal differentiation

Corruption and the Hadleyburg effect

We study the dynamics of corruption relying on two fundamental observations: (a) Given agents detected as corrupt are typically fired and replaced, the historical levels of corruption have an impact on current corruption through the distribution of corruption costs of old agents; (b) Institutions negatively affected by their agents' corrupt activities are likely to respond optimally to it thereby decreasing the payoff from being corrupt. We model this situation by considering an agent who is supposed to monitor a contractor's delivery of a product or service and can manipulate his reports thus allowing the contractor to deliver lower quality in exchange for a bribe. Given the two generations of agents overlapping at any particular date, the administration sets an optimal level of quality in each period. We find that (i) A unique steady state level of corruption exists; (ii) Regardless of the initial distribution, apart from an initial period, equilibrium sequences are decreasing and converge to the steady state, a result we term the "Hadleyburg effect". We use these findings to study the dynamic response of corruption to both temporary and permanent shocks to the profitability of corruption and we find that the "Hadleyburg effect" has important positive and normative implications.Corruption dynamics

Evaluation of topotecan and 10-hydroxycamptothecin on Toxoplasma gondii: Implications on baseline DNA damage and repair efficiency

Toxoplasma gondii is an obligate intracellular parasite in the phylum Apicomplexa that causes toxoplasmosis in humans and animals worldwide. Despite its prevalence, there is currently no effective vaccine or treatment for chronic infection. Although there are therapies against the acute stage, prolonged use is toxic and poorly tolerated. This study aims to explore the potential of repurposing topotecan and 10-hydroxycamptothecin (HCPT) as drugs producing double strand breaks (DSBs) in T. gondii. DSBs are mainly repaired by Homologous Recombination Repair (HRR) and Non-Homologous End Joining (NHEJ). Two T. gondii strains, RHΔHXGPRT and RHΔKU80, were used to compare the drug's effects on parasites. RHΔHXGPRT parasites may use both HRR and NHEJ pathways but RHΔKU80 lacks the KU80 protein needed for NHEJ, leaving only the HRR pathway. Here we demonstrate that topotecan and HCPT, both topoisomerase I venoms, affected parasite replication in a concentration-dependent manner. Moreover, variations in fluorescence intensity measurements for the H2A.X phosphorylation mark (γH2A.X), an indicator of DNA damage, were observed in intracellular parasites under drug treatment conditions. Interestingly, intracellular replicative parasites without drug treatment show a strong positive staining for γH2A.X, suggesting inherent DNA damage. Extracellular (non-replicating) parasites did not exhibit γH2A.X staining, indicating that the basal level of DNA damage is likely to be associated with replicative stress. A high rate of DNA replication stress possibly prompted the evolution of an efficient repair machinery in the parasite, making it an attractive target. Our findings show that topoisomerase 1 venoms are effective antiparasitics blocking T. gondii replication.Fil: Cristaldi, Constanza. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata. Instituto de Investigaciones Biotecnológicas. Universidad Nacional de San Martín. Instituto de Investigaciones Biotecnológicas; ArgentinaFil: Saldarriaga Cartagena, Ana María. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata. Instituto de Investigaciones Biotecnológicas. Universidad Nacional de San Martín. Instituto de Investigaciones Biotecnológicas; ArgentinaFil: Ganuza, Agustina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata. Instituto de Investigaciones Biotecnológicas. Universidad Nacional de San Martín. Instituto de Investigaciones Biotecnológicas; ArgentinaFil: Sullivan, William J.. Indiana University School Of Medicine; Estados UnidosFil: Angel, Sergio Oscar. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata. Instituto de Investigaciones Biotecnológicas. Universidad Nacional de San Martín. Instituto de Investigaciones Biotecnológicas; ArgentinaFil: Vanagas, Laura. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata. Instituto de Investigaciones Biotecnológicas. Universidad Nacional de San Martín. Instituto de Investigaciones Biotecnológicas; Argentin

Canonical histone H2Ba and H2A.X dimerize in an opposite genomic localization to H2A.Z/H2B.Z dimers in Toxoplasma gondii

Histone H2Ba of Toxoplasma gondii was expressed as recombinant protein (rH2Ba) and used to generate antibody in mouse that is highly specific. Antibody recognizing rH2Ba detects a single band in tachyzoite lysate of the expected molecular weight (12kDa). By indirect immunofluorescence (IFA) in in vitro grown tachyzoites and bradyzoites, the signal was detected only in the parasite nucleus. The nucleosome composition of H2Ba was determined through co-immunoprecipitation assays. H2Ba was detected in the same immunocomplex as H2A.X, but not with H2A.Z. Through chromatin immunoprecipitation (ChIP) assays and qPCR, it was observed that H2Ba is preferentially located at promoters of inactive genes and silent regions, accompanying H2A.X and opposed to H2A.Z/H2B.Z dimers

Evaluation of ATM Kinase Inhibitor KU-55933 as Potential Anti-Toxoplasma gondii Agent

Toxoplasma gondii is an apicomplexan protozoan parasite with a complex life cycle composed of multiple stages that infect mammals and birds. Tachyzoites rapidly replicate within host cells to produce acute infection during which the parasite disseminates to tissues and organs. Highly replicative cells are subject to Double Strand Breaks (DSBs) by replication fork collapse and ATM, a member of the phosphatidylinositol 3-kinase (PI3K) family, is a key factor that initiates DNA repair and activates cell cycle checkpoints. Here we demonstrate that the treatment of intracellular tachyzoites with the PI3K inhibitor caffeine or ATM kinase-inhibitor KU-55933 affects parasite replication rate in a dose-dependent manner. KU-55933 affects intracellular tachyzoite growth and induces G1-phase arrest. Addition of KU-55933 to extracellular tachyzoites also leads to a significant reduction of tachyzoite replication upon infection of host cells. ATM kinase phosphorylates H2A.X (γH2AX) to promote DSB damage repair. The level of γH2AX increases in tachyzoites treated with camptothecin (CPT), a drug that generates fork collapse, but this increase was not observed when co-administered with KU-55933. These findings support that KU-55933 is affecting the Toxoplasma ATM-like kinase (TgATM). The combination of KU-55933 and other DNA damaging agents such as methyl methane sulfonate (MMS) and CPT produce a synergic effect, suggesting that TgATM kinase inhibition sensitizes the parasite to damaged DNA. By contrast, hydroxyurea (HU) did not further inhibit tachyzoite replication when combined with KU-55933