The Effect of Discretion on Procurement Performance

85 Pages Posted: 17 Nov 2015

See all articles by Giancarlo Spagnolo

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Decio Coviello

HEC Montreal

Andrea Guglielmo

University of Wisconsin - Madison

Multiple version iconThere are 2 versions of this paper

Date Written: November 16, 2015

Abstract

We run a regression discontinuity design analysis to document the causal effect of increasing buyers' discretion on procurement outcomes in a large database for public works in Italy. Works with a value above a given threshold have to be awarded through an open auction. Works below this threshold can be more easily awarded through a restricted auction, where the buyer has some discretion in terms of who (not) to invite to bid. Our main result is that discretion increases the probability that the same firm wins repeatedly, and it does not deteriorate (and may improve) the procurement outcomes we observe. The effects of discretion persist when we repeat the analysis controlling for the geographical location, corruption, social capital and judicial efficiency in the region of the public buyers running the auctions.

Keywords: Procurement, Restricted Auctions, Regression Discontinuity, Regulatory Discretion

JEL Classification: D02, D44, C31, L11

Suggested Citation

Spagnolo, Giancarlo and Coviello, Decio and Guglielmo, Andrea, The Effect of Discretion on Procurement Performance (November 16, 2015). CEIS Working Paper No. 361. Available at SSRN: https://ssrn.com/abstract=2691555 or http://dx.doi.org/10.2139/ssrn.2691555

Giancarlo Spagnolo (Contact Author)

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

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

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Decio Coviello

HEC Montreal ( email )

3000, chemin de la Cote-Saint-Catherine,
montreal, Quebec H2V3P7
Canada

Andrea Guglielmo

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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