Working Paper: CEPR ID: DP11286
Authors: Decio Coviello; Andrea Guglielmo; Giancarlo Spagnolo
Abstract: We run a regression discontinuity design analysis to document the causal effect ofincreasing buyers' discretion on procurement outcomes in a large database for publicworks in Italy. Works with a value above a given threshold have to be awardedthrough an open auction. Works below this threshold can be more easily awardedthrough a restricted auction, where the buyer has some discretion in terms of who(not) to invite to bid. Our main result is that discretion increases the probability thatthe same firm wins repeatedly, and it does not deteriorate (and may improve) theprocurement outcomes we observe. The effects of discretion persist when we repeatthe analysis controlling for the geographical location, corruption, social capital andjudicial efficiency in the region of the public buyers running the auctions.
Keywords: procurement; restricted auctions; regression discontinuity; regulatory discretion
JEL Codes: D02; D44; C31; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased buyer discretion (D10) | probability of same firm awarded contracts repeatedly (H57) |
| increased buyer discretion (D10) | long-term relationships and potential collusion (L14) |
| increased buyer discretion (D10) | procurement outcomes (H57) |
| increased buyer discretion (D10) | total duration of works (C41) |
| increased buyer discretion (D10) | delays in project delivery (H43) |
| increased buyer discretion (D10) | favoritism and corruption (D73) |