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Political Contributions and Public Procurement: Evidence from Lithuania

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  • Audinga Baltrunaite

Abstract

This paper studies whether firms trade political contributions for public procurement contracts. Combining data on Lithuanian government tenders, corporate donors, and firm characteristics, I examine how a ban on corporate contributions affects the awarding of procurement contracts to companies that donated in the past. Consistent with political favoritism, donors’ probability of winning falls by five percentage points as compared to that of nondonor firms after the ban. Evidence on bidding and victory margins suggests that corporate donors may receive auction-relevant information affecting procurement outcomes in their favor.

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  • Audinga Baltrunaite, 2020. "Political Contributions and Public Procurement: Evidence from Lithuania," Journal of the European Economic Association, European Economic Association, vol. 18(2), pages 541-582.
    • Handle: RePEc:oup:jeurec:v:18:y:2020:i:2:p:541-582.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvz016
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    3. Barraza, Santiago & Rossi, Martín A & Ruzzier, Christian A, 2022. "Sleeping with the enemy: The perils of having the government on(the)board," Journal of Comparative Economics, Elsevier, vol. 50(3), pages 641-651.
    4. Colin P. Green & Swarnodeep Homroy, 2022. "Incorporated in Westminster: Channels and Returns to Political Connection in the United Kingdom," Economica, London School of Economics and Political Science, vol. 89(354), pages 377-408, April.
    5. Stéphane Benveniste & Renaud Coulomb & Marc Sangnier, 2022. "The (Market) Value of State Honors," Working Papers halshs-03558566, HAL.
    6. Stjepan Srhoj & Melko Dragojević, 2024. "Public Procurement and Supplier Job Creation: Insights from Auctions," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 40(2), pages 470-527.
    7. Lei, Yu-Hsiang, 2021. "Quid pro quo? Government-firm relationships in China," Journal of Public Economics, Elsevier, vol. 199(C).
    8. Brugués, Felipe & Brugués, Javier & Giambra, Samuele, 2024. "Political connections and misallocation of procurement contracts: Evidence from Ecuador," Journal of Development Economics, Elsevier, vol. 170(C).
    9. Kris De Jaegher & Michal Soltes & Vitezslav Titl, 2023. "Easing Renegotiation Rules in Public Procurement: Evidence from a Policy Reform," CERGE-EI Working Papers wp757, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    10. Palguta, Ján, 2019. "Political representation and public contracting: Evidence from municipal legislatures," European Economic Review, Elsevier, vol. 118(C), pages 411-431.
    11. Titl, Vitezslav & De Witte, Kristof & Geys, Benny, 2021. "Political donations, public procurement and government efficiency," World Development, Elsevier, vol. 148(C).
    12. Barbakadze, I., 2023. "With a Little Help from My Friend: Political Connections and Allocation of COVID-19 Aid," Cambridge Working Papers in Economics 2355, Faculty of Economics, University of Cambridge.
    13. Audinga Baltrunaite & Cristina Giorgiantonio & Sauro Mocetti & Tommaso Orlando, 2021. "Discretion and Supplier Selection in Public Procurement," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 37(1), pages 134-166.
    14. Carla Carlucci & Cristina Giorgiantonio & Tommaso Orlando, 2019. "Public works in Italy: time to completion and its determinants," Questioni di Economia e Finanza (Occasional Papers) 538, Bank of Italy, Economic Research and International Relations Area.
    15. Grdović Gnip, Ana, 2022. "All you need is political love? Assessing the effects of partisan favouritism in Croatia's public procurement," European Journal of Political Economy, Elsevier, vol. 75(C).
    16. Titl, Vitezslav & Geys, Benny, 2019. "Political donations and the allocation of public procurement contracts," European Economic Review, Elsevier, vol. 111(C), pages 443-458.
    17. Balán, Pablo & Dodyk, Juan & Puente, Ignacio, 2023. "Kin in the game: How family ties help firms overcome campaign finance regulation," Working Papers 330, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    18. Park, SeHyun, 2023. "Profitability of politically corrupt firms: Evidence from Romania," Emerging Markets Review, Elsevier, vol. 54(C).
    19. Miroslav Palanský, 2021. "The value of political connections in the post-transition period: evidence from Czechia," Public Choice, Springer, vol. 188(1), pages 121-154, July.
    20. Gallego, Jorge & Prem, Mounu & Vargas, Juan F., 2020. "Corruption in the Times of Pandemia," Working papers 43, Red Investigadores de Economía.
    21. Kang, Sungwon & Kim, Daehwan & Kim, Geonhyeong, 2023. "Corporate entertainment expenses and corruption in public procurement," Journal of Asian Economics, Elsevier, vol. 84(C).
    22. Tong, Zefeng & Qi, Yu & Wei, Yongchang & Lin, Jiaying & Zhuang, Jingyi, 2023. "Returning the favor: Official consumption and government–company reciprocity," Journal of Asian Economics, Elsevier, vol. 89(C).
    23. Jääskeläinen, Jan & Tukiainen, Janne, 2019. "Anatomy of public procurement," Working Papers 118, VATT Institute for Economic Research.
    24. Louis-Sidois, Charles, 2024. "Buying winners," Games and Economic Behavior, Elsevier, vol. 143(C), pages 1-11.
    25. Ravi Radhakrishnan, 2022. "Public expenditure allocation, lobbying, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 756-780, August.

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