Competition in nonmarket environments

This doctoral thesis analyses competitive situations in which public institutions are involved and evaluates public institutions from three different perspectives. The first contribution analyses a regular activity of public institutions, procurement of services, in which there is a potential moral hazard problem. A public institution should bias future competitions in favour to the past winner who performs a high quality service, and that this bias should be additive. When the linearity is reduced a bit, the moral hazard problem is less severe. However, if the linearity is reduced too much, the advantage of the past winner disappears and biasing the contest can be counterproductive. The second contribution regards how public institutions can change a reality: disadvantage of minorities. Some affirmative action policies establish that a set of disadvantaged competitors has access to an extra prize. We find that an extra prize is a powerful tool to ensure participation of disadvantaged agents and this tool can be established purely on efficiency grounds when the disadvantage of the minority is not too severe. The third contribution studies agents’ perception of public institutions for the case of political parties in member countries of the European Union (EU). We find that economic factors, in addition to ideological and electoral motives, are determinants of partisan support to European integration. This support, which has grown in recent periods, depends on the distribution among member countries of the benefits from the EU and the specific economic situation of the each political party’s country.