To Allot or Not to Allot? Managing Public Services in Europe
Abstract: Using an incomplete contract framework, we evaluate the total net eect of allot- ment in public procurement, which has been promoted by the recent European Direc- tive 2004/18/EC. More precisely, we explore the consequences of this legislation on the global surplus and on the payo of the public authority. Our results show that al- lotment does not maximize the total surplus but may maximize the payo of the public authority representing the citizens.