Recently, calls to acknowledge efficiency in E.C. public procurement law, have lead to the finding that strict anti-discrimination and transparency measures might interfere with pursuing such a purpose. This paper focuses on such efficiency considerations and presents a law and economics analysis of competitive bidding by using basic economic tools to examine social-costs aspects of competition in public procurement procedures. It is suggested that whenever quality criteria are considered by the public entity, the number of bidders should be restricted according to two measures: 1) variable costs, which increase with the number of participants and are borne by the public entity, and 2) private incentives of bidders to win gains of prestige and reputation that induce them to enter the competition for public contracts. The conclusion of this paper is that policies to restrict the number of bidders are recommended and a method to determine the optimal number of bidders in restricted procedures is therefore proposed.