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Discretion and supplier selection in public procurement

Author

Listed:
  • Audinga Baltrunaite

    () (Banca d'Italia)

  • Cristina Giorgiantonio

    () (Banca d'Italia)

  • Sauro Mocetti

    () (Banca d'Italia)

  • Tommaso Orlando

    () (Banca d'Italia)

Abstract

Public procurement outcomes depend on the ability of the procuring agency to select high-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 2009-2013, we study how a reform extending the scope of bureaucrat discretion affects supplier selection. We find that the share of contracts awarded to firms having a local politician among its administrators or shareholders increases, while the (ex-ante) labor productivity of the winning firms decreases, thus suggesting a potential misallocation of public funds. These effects are concentrated among lower quality procurement agencies.

Suggested Citation

  • 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.
  • Handle: RePEc:bdi:wptemi:td_1178_18
    as

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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2018/2018-1178/en_tema_1178.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    discretion; supplier selection; public procurement; transparency; corruption;

    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 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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