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The home bias in procurement. Cross-border procurement of medical supplies during the Covid-19 pandemic

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  • Hanspach, Philip

Abstract

Public procurement markets are often national despite a general agreement against national preferencing. I exploit shocks occurring during the Covid-19 pandemic to two important factors, crisis urgency, measured through local infection rates, and increased buyer discretion, to study home bias in public procurement. Two causal difference-in-difference analyses on novel data for medical supplies in Europe show that home bias is not inevitable. An increase in local infection rates by one standard deviation locally increases the share of cross-border procurement by 19.3 percentage points over a baseline of 1.5 percent. Also, deregulation that allowed for buyer discretion caused cross-border procurement to increase by more than 35 percentage points. A simple theoretical model systematizes these findings.

Suggested Citation

  • Hanspach, Philip, 2023. "The home bias in procurement. Cross-border procurement of medical supplies during the Covid-19 pandemic," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:indorg:v:89:y:2023:i:c:s0167718723000577
    DOI: 10.1016/j.ijindorg.2023.102976
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    More about this item

    Keywords

    Public procurement; Home bias; Regulation; Difference-in-differences; Covid-19;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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