Number of bidders, level of competition, and bid pricing in public procurement

This article investigates the factors influencing the degree of competition and its effects on public procurement prices in Burkina Faso. The article uses a dataset comprising more than 1,600 public contracts awarded by different contracting authorities from 2016–2018. Two distinct models are used: a negative binomial model that explores the determinants of competition, measured by the number of bidders, and an instrumental variable model robust to heteroskedasticity to assess the impact of competition on the price of the winning bid. The results indicate that an optimal number of seven to nine bidders is required to take full advantage of competition, whereas the current average is only five. This disparity between the optimal and actual level of competition highlights the need to reform public procurement policies to encourage greater competition and improve efficiency. JEL Classification : C31, D41, D44, H57