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Border Effects in European Public Procurement

Author

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  • Herz, Benedikt
  • Varela-Irimia, Xosé-Luís

Abstract

This paper documents border effects in public procurement in the European Union Single Market. We use a data set of 2.3 million European public procurement contracts awarded between 2010 and 2014 to estimate a gravity model of bilateral procurement flows between European NUTS3 region pairs. Controlling for numerous variables, we find border effects on both the intra- and international level. Cross-national border effects are especially sizeable: firms located in the home region of the tendering authority are about 1300 times more likely to be awarded a contract than foreign firms. Our results hold for goods, services, and construction works procurement and cannot be explained by common currency, same language, and variables capturing cultural distance.

Suggested Citation

  • Herz, Benedikt & Varela-Irimia, Xosé-Luís, 2016. "Border Effects in European Public Procurement," MPRA Paper 76401, University Library of Munich, Germany, revised 24 Jan 2017.
  • Handle: RePEc:pra:mprapa:76401
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    File URL: https://mpra.ub.uni-muenchen.de/80138/1/MPRA_paper_80138.pdf
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    References listed on IDEAS

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    Cited by:

    1. Tamminen, Saara & Niemi, Janne & Nilsson Hakkala, Katariina, 2017. "The expected economic impacts of the EU-Canada Comprehensive Economic and Trade Agreement in Finland," Research Reports 187, VATT Institute for Economic Research.

    More about this item

    Keywords

    public procurement; public contract; border effect; home bias; cross-border; gravity model; European Union; Single Market;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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