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The Effect of Discretion on Procurement Performance

Author

Listed:
  • Decio Coviello

    (HEC Montréal, Montréal, Québec H3T 2A7, Canada)

  • Andrea Guglielmo

    (Analysis Group, Inc., Boston, Massachusetts 02199)

  • Giancarlo Spagnolo

    (Stockholm Institute of Transition Economics, Stockholm School of Economics, 113 83 Stockholm, Sweden; Einaudi Institute for Economics and Finance, 00187 Roma, Italy; University di Roma Tor Vergata, 00133 Roma, Italy)

Abstract

We run a regression discontinuity design analysis to document the causal effect of increasing buyers’ discretion on procurement outcomes in a large database for public works in Italy. Works with a value above a given threshold have to be awarded through an open auction. Works below this threshold can be more easily awarded through a restricted auction, where the buyer has some discretion in terms of who (not) to invite to bid. Our main result is that discretion increases the probability that the same firm wins repeatedly, and it does not deteriorate (and may improve) the procurement outcomes we observe. The effects of discretion persist when we repeat the analysis controlling for the geographical location, corruption, social capital, and judicial efficiency in the region of the public buyers running the auctions. Data and the online appendix are available at https://doi.org/10.1287/mnsc.2016.2628 . This paper was accepted by John List, behavioral economics.

Suggested Citation

  • Decio Coviello & Andrea Guglielmo & Giancarlo Spagnolo, 2018. "The Effect of Discretion on Procurement Performance," Management Science, INFORMS, vol. 64(2), pages 715-738, February.
  • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:2:p:715-738
    DOI: mnsc.2016.2628
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    References listed on IDEAS

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    Cited by:

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    3. Rodrigo Carril, 2021. "Rules versus discretion in public procurement," Economics Working Papers 1765, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Marina Cavalieri & Calogero Guccio & Domenico Lisi & Ilde Rizzo, 2020. "Does Institutional Quality Matter for Infrastructure Provision? A Non-parametric Analysis for Italian Municipalities," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(3), pages 521-562, November.
    5. Giuseppe Francesco Gori & Patrizia Lattarulo & Marco Mariani, 2021. "The Expediting Effect of Monitoring on Infrastructural Works. A Regression-Discontinuity Approach with Multiple Assignment Variables," Papers 2102.09625, arXiv.org.
    6. 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, pages 856-880.
    7. Bucciol, Alessandro & Camboni, Riccardo & Valbonesi, Paola, 2020. "Purchasing medical devices: The role of buyer competence and discretion," Journal of Health Economics, Elsevier, vol. 74(C).
    8. Ravenda, Diego & Giuranno, Michele G. & Valencia-Silva, Maika M. & Argiles-Bosch, Josep M. & García-Blandón, Josep, 2020. "The effects of mafia infiltration on public procurement performance," European Journal of Political Economy, Elsevier, vol. 64(C).

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