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Publicity requirements in public procurement: Evidence from a regression discontinuity design

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  • Coviello, Decio
  • Mariniello, Mario

Abstract

We document whether and how publicizing a public procurement auction causally affects entry and the costs of procurement. We run a regression discontinuity design analysis on a large database of Italian procurement auctions. Auctions with a value above the threshold must be publicized in the Regional Official Gazette and two provincial newspapers. We find that the increased publicity requirement induces more entry and higher winning rebates, which reduces the costs of procurement and rationalizes public spending. The evidence suggests that the number of bidders is the channel through which publicity affects rebates. Increased publicity also selects different winners: it increases the likelihood that the winner hails from outside the region of the public administration and that the winner is a large company. Such companies tend to win repeated auctions gaining market share. Publicity seems to have no adverse effect on the ex-post renegotiations of the works, as measured by the percent of works delivered with delay or that are subcontracted. Estimates are robust to alternative measures of publicity, alternative model specifications, different sample selections, to a falsification analysis at simulated thresholds and to the possibility that firms learn about auctions from a web-based for-profit information provider.

Suggested Citation

  • Coviello, Decio & Mariniello, Mario, 2014. "Publicity requirements in public procurement: Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 109(C), pages 76-100.
  • Handle: RePEc:eee:pubeco:v:109:y:2014:i:c:p:76-100
    DOI: 10.1016/j.jpubeco.2013.10.008
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    Cited by:

    1. Decarolis, Francesco & Palumbo, Giuliana, 2015. "Renegotiation of public contracts: An empirical analysis," Economics Letters, Elsevier, vol. 132(C), pages 77-81.
    2. Decio Coviello & Andrea Guglielmo & Giancarlo Spagnolo, 2015. "The Effect of Discretion on Procurement Performance," CEIS Research Paper 361, Tor Vergata University, CEIS, revised 17 Nov 2015.
    3. Gerardino, Maria Paula & Litschig, Stephan & Pomeranz, Dina, 2017. "Can Audits Backfire? Evidence from Public Procurement in Chile," CEPR Discussion Papers 12529, C.E.P.R. Discussion Papers.
    4. Decarolis, Francesco, 2018. "Procurement Centralization in the EU: the Case of Italy," CEPR Discussion Papers 12567, C.E.P.R. Discussion Papers.
    5. repec:eee:eecrev:v:111:y:2019:i:c:p:380-399 is not listed on IDEAS
    6. Sümeyra Atmaca & Elena Podkolzina & Koen Schoors, 2019. "Corrupt Reserve Prices," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 19/961, Ghent University, Faculty of Economics and Business Administration.
    7. Klenio Barbosa & Pierre C. Boyer, 2012. "Discrimination in Dynamic Procurement Design with Learning-by-doing," CESifo Working Paper Series 3947, CESifo Group Munich.
    8. Nicola Branzoli & Francesco Decarolis, 2015. "Entry and Subcontracting in Public Procurement Auctions," Management Science, INFORMS, vol. 61(12), pages 2945-2962, December.
    9. Nicola Mastrorocco, 2018. "Organised Crime, Captured Politicians and the Allocation of Public Resources," Trinity Economics Papers tep1018, Trinity College Dublin, Department of Economics, revised Jan 2019.
    10. Vitezslav Titl & Kristof De Witte & Benny Geys, 2019. "Political donations, public procurement and government efficiency," CESifo Working Paper Series 7591, CESifo Group Munich.
    11. Ari Hyytinen & Sofia Lundberg & Otto Toivanen, 2015. " Design of public procurement auctions: Evidence from cleaning contracts," Working Papers Department of Managerial Economics, Strategy and Innovation (MSI) 483670, KU Leuven, Faculty of Economics and Business, Department of Managerial Economics, Strategy and Innovation (MSI).
    12. Olga Chiappinelli, 2017. "Decentralization and Public Procurement Performance: New Evidence from Italy," Discussion Papers of DIW Berlin 1704, DIW Berlin, German Institute for Economic Research.
    13. 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".
    14. Georgia Kosmopoulou & Carlos Lamarche & Xueqi Zhou, 2016. "Price Adjustment Policies And Firm Size," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 895-906, April.
    15. Audinga Baltrunaite & Cristina Giorgiantonio & Sauro Mocetti & Tommaso Orlando, 2018. "Discretion and supplier selection in public procurement," Temi di discussione (Economic working papers) 1178, Bank of Italy, Economic Research and International Relations Area.
    16. repec:eee:transa:v:113:y:2018:i:c:p:35-54 is not listed on IDEAS
    17. repec:eee:eecrev:v:111:y:2019:i:c:p:443-458 is not listed on IDEAS
    18. Leonardo M. Giuffrida & Gabriele Rovigatti, 2017. "Can the Private Sector Ensure the Public Interest? Evidence from Federal Procurement," CEIS Research Paper 411, Tor Vergata University, CEIS, revised 20 Jul 2017.
    19. Wei-Shiun Chang & Bo Chen & Timothy C. Salmon, 2015. "An Investigation of the Average Bid Mechanism for Procurement Auctions," Management Science, INFORMS, vol. 61(6), pages 1237-1254, June.
    20. Jan Palguta, 2013. "Nonlinear Incentive Schemes and Corruption in Public Procurement: Evidence from the Czech Republic," CERGE-EI Working Papers wp483, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    21. Spagnolo, Giancarlo & Decarolis, Francesco & Iossa, Elisabetta & Mollisi, Vincenzo & Giuffrida, Leonardo, 2016. "Buyer Quality and Procurement Outcomes: Explorative Evidence From the US," SITE Working Paper Series 41, Stockholm School of Economics, Stockholm Institute of Transition Economics.

    More about this item

    Keywords

    Publicity; Procurement; Regression discontinuity; Public spending;

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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