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Public Procurement in Law and Practice

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  • Erica Bosio
  • Simeon Djankov
  • Edward L. Glaeser
  • Andrei Shleifer

Abstract

We examine a new data set of laws and practices governing public procurement, as well as procurement outcomes, in 187 countries. We measure regulation as restrictions on discretion of the procuring agents. We find that laws and practices are highly correlated with each other across countries, better practices are correlated with better outcomes, but laws themselves are not correlated with outcomes. To shed light on this puzzle, we present a model of procurement in which both regulation and public sector capacity determine the efficiency of procurement. In the model, regulation is effective in countries with low public sector capacity, and detrimental in countries with high public sector capacity because it inhibits the socially optimal exercise of discretion. We find evidence broadly consistent with this prediction: regulation of procurement improves outcomes, but only in countries with low public sector capacity.

Suggested Citation

  • Erica Bosio & Simeon Djankov & Edward L. Glaeser & Andrei Shleifer, 2020. "Public Procurement in Law and Practice," NBER Working Papers 27188, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27188
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    Cited by:

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    2. Srhoj, Stjepan & Dragojević, Melko, 2021. "Public procurement and supplier job creation: Insights from auctions," MPRA Paper 110018, University Library of Munich, Germany.
    3. Federico Cingano & Filippo Palomba & Paolo Pinotti & Enrico Rettore, 2022. "Making Subsidies Work: Rules vs. Discretion," CESifo Working Paper Series 9560, CESifo.
    4. Gallego, Jorge & Rivero, Gonzalo & Martínez, Juan, 2021. "Preventing rather than punishing: An early warning model of malfeasance in public procurement," International Journal of Forecasting, Elsevier, vol. 37(1), pages 360-377.
    5. Jonas Hjort & Vinayak Iyer & Golvine de Rochambeau, 2020. "Informational Barriers to Market Access: Experimental Evidence from Liberian Firms," SciencePo Working papers hal-03389180, HAL.
    6. Mulabdic, Alen & Rotunno, Lorenzo, 2022. "Trade barriers in government procurement," European Economic Review, Elsevier, vol. 148(C).
    7. Florence Kondylis & Mattea Stein, 2018. "The Speed of Justice," PSE Working Papers halshs-01735025, HAL.
    8. Adam, Isabelle & Fazekas, Mihály, 2021. "Are emerging technologies helping win the fight against corruption? A review of the state of evidence," Information Economics and Policy, Elsevier, vol. 57(C).
    9. Srhoj, Stjepan & Dragojević, Melko, 2021. "Public procurement and supplier job creation: Insights from auctions," MPRA Paper 110018, University Library of Munich, Germany.
    10. Rodrigo Carril, 2021. "Rules Versus Discretion in Public Procurement," Working Papers 1232, Barcelona School of Economics.
    11. Julian di Giovanni & Manuel García-Santana & Priit Jeenas & Enrique Moral-Benito & Josep Pijoan-Mas, 2022. "Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications," Working Papers 1321, Barcelona School of Economics.
    12. Massimo Finocchiaro Castro & Calogero Guccio, 2021. "Does greater discretion improve the performance in the execution of public works? Evidence from the reform of discretionary thresholds in Italy," Working papers 108, Società Italiana di Economia Pubblica.
    13. Tukiainen, Janne & Blesse, Sebastian & Bohne, Albrecht & Giuffrida, Leonardo M. & Jääskeläinen, Jan & Luukinen, Ari & Sieppi, Antti, 2021. "What are the priorities of bureaucrats? Evidence from conjoint experiments with procurement officials," ZEW Discussion Papers 21-033, ZEW - Leibniz Centre for European Economic Research.
    14. Gallego, Jorge & Prem, Mounu & Vargas, Juan F., 2020. "Corruption in the Times of Pandemia," SocArXiv js8by, Center for Open Science.
    15. Simone Wurster & Luana Ladu, 2022. "Triple-C: A Tridimensional Sustainability-Oriented Indicator for Assessing Product Circularity in Public Procurement," Sustainability, MDPI, vol. 14(21), pages 1-23, October.
    16. Olga Balaeva & Yuliya Rodionova & Andrei A. Yakovlev & Andrey Tkachenko, 2021. "Public Procurement Efficiency As Perceived By Market Participants: The Case Of Russia," HSE Working papers WP BRP 29/PSP/2021, National Research University Higher School of Economics.
    17. Aristotelis Mavidis & Dimitris Folinas, 2022. "From Public E-Procurement 3.0 to E-Procurement 4.0; A Critical Literature Review," Sustainability, MDPI, vol. 14(18), pages 1-23, September.
    18. Detkova, Polina & Tkachenko, Andrey & Yakovlev, Andrei, 2021. "Gender heterogeneity of bureaucrats in attitude to corruption: Evidence from list experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 217-233.

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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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