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Auctions versus Negotiations: Evidence from Public Procurement in the Italian Healthcare Sector

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Abstract

This paper contributes to the empirical literature on auctions and negotiations. Using healthcare facilities data on procurement contracts, I find evidence that auctions do not yield lower prices than negotiations. This result is robust to specifications tackling quality differences, endogenous participation, and the bilateral and multilateral nature of negotiated procedures. I also find evidence that late payments reduce competition and thus affect firms’ participation choices. A simple test based on Benford’s Law is used to rule out collusion among participants as a possible explanation of the results.

Suggested Citation

  • Mercedes Vellez, 2011. "Auctions versus Negotiations: Evidence from Public Procurement in the Italian Healthcare Sector," CEIS Research Paper 191, Tor Vergata University, CEIS, revised 29 Mar 2011.
  • Handle: RePEc:rtv:ceisrp:191
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    Cited by:

    1. Michal Kvasnicka & Rostislav Stanek & Ondrej Krcal, 2015. "Do Auctions Improve Public Procurement? Evidence from the Czech Republic," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 241-257, December.
    2. Alberto Cavaliere & Giovanni Crea & Angelo Cozzi, 2018. "Price Discrimination in the Italian Medical Device Industry: An Empirical Analysis," DEM Working Papers Series 146, University of Pavia, Department of Economics and Management.
    3. Simona Baldi & Davide Vannoni, 2014. "The Impact of Centralization, Corruption and Institutional Quality on Procurement Prices: An Application to Pharmaceutical Purchasing in Italy," Carlo Alberto Notebooks 379, Collegio Carlo Alberto.

    More about this item

    Keywords

    Auctions; negotiations; procurement; medical technology; competition; endogeneity; collusion.;

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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