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Discretion and Supplier Selection in Public Procurement

Author

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  • Audinga Baltrunaite
  • Cristina Giorgiantonio
  • Sauro Mocetti
  • Tommaso Orlando

Abstract

Public procurement outcomes depend on the ability of the procuring agency to select well-performing suppliers. Should public administrations be granted more or less discretion in their decision-making? Using Italian data on municipal public works tendered in the period 2009–13, we study how a reform extending the scope of bureaucrat discretion affects supplier selection. We find that the share of contracts awarded to politically connected firms increases while the (ex ante) labor productivity of the winning firm decreases, thus suggesting a potential misallocation of public funds. The results are heterogeneous across procuring agencies: the effects on supplier selection are primarily concentrated among less qualified and less transparent administrations. (JEL D72, D73, H57, P16)

Suggested Citation

  • 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.
    • Handle: RePEc:oup:jleorg:v:37:y:2021:i:1:p:134-166.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewaa009
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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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