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Firms’ Qualifications and Subcontracting in Public Procurement: An Empirical Investigation

Author

Listed:
  • Luigi Moretti,

    (Unipd - Università degli Studi di Padova = University of Padua)

  • Paola Valbonesi

Abstract

Using a newly assembled dataset, we empirically investigate the effects of subcontracting on procurement auction prices in Italy. In this setting, the pre-qualifications required for firms aiming to bid on public contracts determine the firms' different subcontracting formats. We find that fully qualified firms in a position to choose whether to subcontract generally offer lower prices than partially qualified firms, which must proceed with mandatory subcontracts. This result indicates that the firms' voluntary arrangements tend to improve market performance, while imposed arrangements tend to worsen market performance, in the public procurement supply-chain.

Suggested Citation

  • Luigi Moretti, & Paola Valbonesi, 2015. "Firms’ Qualifications and Subcontracting in Public Procurement: An Empirical Investigation," Post-Print hal-01441874, HAL.
    • Handle: RePEc:hal:journl:hal-01441874
    DOI: 10.1093/jleo/ewv001
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    Cited by:

    1. Seres, G. & Pigon, Adam, 2019. "On the Competitive Effects of Screening in Procurement," Other publications TiSEM 3314c398-ea79-4f74-96f4-8, Tilburg University, School of Economics and Management.
    2. Stefano Galavotti & Luigi Moretti & Paola Valbonesi, 2018. "Sophisticated Bidders in Beauty-Contest Auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 10(4), pages 1-26, November.
    3. Decarolis, Francesco & Palumbo, Giuliana, 2015. "Renegotiation of public contracts: An empirical analysis," Economics Letters, Elsevier, vol. 132(C), pages 77-81.
    4. Decio Coviello & Luigi Moretti & Giancarlo Spagnolo & Paola Valbonesi, 2018. "Court Efficiency and Procurement Performance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(3), pages 826-858, July.
    5. Chiappinelli, Olga, 2020. "Decentralization and Public Procurement Performance: New Evidence from Italy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 58(2), pages 856-880.
    6. Laura Rondi & Paola Valbonesi, 2017. "Pre- and post-award outsourcing: Temporary partnership versus subcontracting in public procurement," "Marco Fanno" Working Papers 0211, Dipartimento di Scienze Economiche "Marco Fanno".
    7. B. Cesi & M. Lorusso, 2020. "Collusion in public procurement: the role of subcontracting," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(1), pages 251-265, April.
    8. Viktoria Akberdina & Anatoliy Grebenkin & Olga Smirnova, 2017. "Comprehensive Assessment of Industries Economic Security: Regional Aspect," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1264-1279.
    9. De Silva, Dakshina G. & Kosmopoulou, Georgia & Lamarche, Carlos, 2017. "Subcontracting and the survival of plants in the road construction industry: A panel quantile regression analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 113-131.
    10. Martin Vyklicky & Petr Man & Rudolf Franz Heidu & Radek Jurcík, 2016. "Qualification Requirements for Foreign Suppliers in Public Procurement - Evidence from the Czech Republic," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 19-39, March.
    11. Calogero Guccio & Domenico Lisi & Ilde Rizzo, 2019. "When the purchasing officer looks the other way: on the waste effects of debauched local environment in public works execution," Economics of Governance, Springer, vol. 20(3), pages 205-236, September.

    More about this item

    Keywords

    Subcontracting; Public procurement; Supply chain;
    All these keywords.

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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