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Tenure in Office and Public Procurement

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Abstract

We investigate how the functioning of public procurement is affected by the time politicians have stayed in office. We match a data set on public procurement auctions by Italian municipalities to a data set on the politics of municipal governments. For each municipality, we relate the mayor’s tenure in office to several outcomes of the procurement process. The main result is that an increase in a mayor’s tenure (the number of terms in office) is associated with “worse” outcomes: fewer bidders per auction, a higher cost of procurement, and a higher probability that the winner is local and that the same firm is awarded repeated auctions. We make use of a quasi-experimental change in the electoral law (the introduction of a two-term limit) to argue that the correlation is in fact causal. Finally, we provide a simple theoretical model of repeated auctions in which these findings are consistent with time in office progressively leading to collusion between government officials and a few favored bidders.

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Bibliographic Info

Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 179.

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Length: 46 pages
Date of creation: 21 Dec 2010
Date of revision: 21 Dec 2010
Handle: RePEc:rtv:ceisrp:179

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web page: http://www.ceistorvergata.it
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

Related research

Keywords: Tenure in office; Procurement auctions; Public works; Term limit;

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References

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  1. Ernesto Dal Bó & Martín Rossi, 2008. "Term Length and Political Performance," NBER Working Papers 14511, National Bureau of Economic Research, Inc.
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Cited by:
  1. Shingal, ANIRUDH, 2011. "Foreign market access in government procurement," MPRA Paper 32814, University Library of Munich, Germany.
  2. Sofia, AmaralGarcia & Veronica, Grembi, 2011. "Curb your premium! evaluating state intervention in medical malpractice insurance," MPRA Paper 32301, University Library of Munich, Germany.

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