Working Paper: CEPR ID: DP17019
Authors: Clarissa Lotti; Arieda Muco; Giancarlo Spagnolo; Tommaso Valletti
Abstract: Centralization of public procurement can lower prices for the government's direct purchase of goods and services. This paper focuses on indirect savings. Public administrations that do not procure directly through a central procurement agency might benefit from the availability of centrally-procured goods. We exploit the introduction of a central purchasing agency in Italy and find that prices came down by 22% among administrations that bought autonomously. These indirect effects appear to be driven by informational externalities, especially for less competent public buyers purchasing technologically more complex goods. Accounting for indirect savings increases the estimate of direct ones.
Keywords: centralization; informational externalities; procurement; public contracts
JEL Codes: D44; H11; H57; H83; L38; L88
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Central Purchasing Agency (consip) introduction (H57) | Price reduction for public administrations (H49) |
| Price reduction for public administrations (H49) | Indirect savings from informational externalities (D89) |
| Less competent public buyers (H57) | Greater benefit from centrally procured goods (H57) |
| Technologically complex goods sensitivity to informational externalities (L15) | Indirect savings (J32) |