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Industrial Specialisation and Public Procurement: Theory and Empirical Evidence

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  • Brülhart, Marius

    ()
    (Ecole des HEC University of Lausanne)

  • Trionfetti, Federico

    ()
    (Queen’s University of Belfast Division of Economics)

Abstract

Public-sector purchases from private firms account for over 10 percent of GDP in most developed countries, and they are typically biased in favour of domestic suppliers. This paper explores the impact of discriminatory public procurement on the location of industries. Our main theoretical finding is that, in a setting with increasing returns and trade costs, home-biased procurement can override other determinants of industrial specialisation. Our empirical analysis underscores the significance of discriminatory procurement. Drawing on a cross-country, crossindustry data sample for the EU, we find that determinants of industry location such as factor endowments, market access and intermediate inputs are significant in sectors where public procurement is small, but they lose their significance in sectors where public procurement is important.

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Bibliographic Info

Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 16 (2001)
Issue (Month): ()
Pages: 106-127

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Handle: RePEc:ris:integr:0156

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Web page: http://econo.sejong.ac.kr/
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Related research

Keywords: Public Procurement; Industrial Specialisation; European Union;

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Cited by:
  1. Ottaviano, Gianmarco I. P., 2001. "Footloose capital, market access, and the geography of regional state aid," HWWA Discussion Papers 132, Hamburg Institute of International Economics (HWWA).
  2. Marius Brulhart & Federico Trionfetti, 2000. "Home-Biased Demand and International Specialisation: A Test of Trade Theories," Econometric Society World Congress 2000 Contributed Papers 0031, Econometric Society.
  3. F Trionfetti, 1999. "On the Home Market Effect: Theory and Empirical Evidence," CEP Discussion Papers dp0430, Centre for Economic Performance, LSE.
  4. Eric Strobl, 2004. "Trends and Determinants of the Geographic Dispersion of Irish Manufacturing Activity, 1926- 1996," Regional Studies, Taylor & Francis Journals, vol. 38(2), pages 191-205.
  5. Pierre M. Picard & Dao-Zhi Zeng, 2009. "A Harmonization of First and Second Natures," CREA Discussion Paper Series 09-10, Center for Research in Economic Analysis, University of Luxembourg.
  6. Federico Trionfetti, 1999. "On the home market effect: theory and empirical evidence," LSE Research Online Documents on Economics 20215, London School of Economics and Political Science, LSE Library.
  7. Rolf Weder, 2003. "Comparative home-market advantage: An empirical analysis of British and American exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(2), pages 220-247, June.
  8. Shingal, Anirudh, 2013. ""New" econometric evidence for the Baldwin-Richardson (1972)/Miyagiwa (1991) theoretical predictions in government procurement," MPRA Paper 49138, University Library of Munich, Germany.

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