Tenure in Office and Public Procurement

46 Pages Posted: 16 Dec 2010

See all articles by Decio Coviello

Decio Coviello

HEC Montreal

Stefano Gagliarducci

University of Rome, Tor Vergata - Faculty of Economics; Einaudi Institute for Economics and Finance (EIEF); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December, 16 2010

Abstract

We investigate how the functioning of public procurement is affected by the time politicians have stayed in office. We match a data set on public procurement auctions by Italian municipalities to a data set on the politics of municipal governments. For each municipality, we relate the mayor’s tenure in office to several outcomes of the procurement process. The main result is that an increase in a mayor’s tenure (the number of terms in office) is associated with “worse” outcomes: fewer bidders per auction, a higher cost of procurement, and a higher probability that the winner is local and that the same firm is awarded repeated auctions. We make use of a quasi-experimental change in the electoral law (the introduction of a two-term limit) to argue that the correlation is in fact causal. Finally, we provide a simple theoretical model of repeated auctions in which these findings are consistent with time in office progressively leading to collusion between government officials and a few favored bidders.

Keywords: Tenure in office, Procurement auctions, Public works, Term limit

JEL Classification: D44, D72, D73, H57, H70

Suggested Citation

Coviello, Decio and Gagliarducci, Stefano, Tenure in Office and Public Procurement (December, 16 2010). CEIS Working Paper No. 179, Available at SSRN: https://ssrn.com/abstract=1726340 or http://dx.doi.org/10.2139/ssrn.1726340

Decio Coviello (Contact Author)

HEC Montreal ( email )

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montreal, Quebec H2V3P7
Canada

Stefano Gagliarducci

University of Rome, Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

HOME PAGE: http://https://sites.google.com/site/stefanogagliarducci/

Einaudi Institute for Economics and Finance (EIEF) ( email )

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Rome, 00187
Italy

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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