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

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.

Keywords: Auctions, negotiations, procurement, medical technology, competition, endogeneity, collusion

JEL Classification: H57, C36, I18