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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:

    1. Srhoj, Stjepan & Dragojević, Melko, 2021. "Public procurement and supplier job creation: Insights from auctions," MPRA Paper 109997, University Library of Munich, Germany.
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    4. Srhoj, Stjepan & Dragojević, Melko, 2021. "Public procurement and supplier job creation: Insights from auctions," MPRA Paper 110018, University Library of Munich, Germany.
    5. Rodrigo Carril, 2021. "Rules Versus Discretion in Public Procurement," Working Papers 1232, Barcelona Graduate School of Economics.

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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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