Bunching Below Thresholds to Manipulate Public Procurement

38 Pages Posted: 26 Feb 2019

See all articles by Bedri Kamil Onur Tas

Bedri Kamil Onur Tas

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Date Written: February 2019

Abstract

I examine a manipulation scheme that public authorities can use to exercise more discretion in public procurement. I propose that regression discontinuity manipulation tests can be implemented to identify manipulative authorities. I investigate the European Union public procurement data set. I find that 10-13% of examined authorities have high probabilities of bunching estimated costs just below thresholds. Manipulative authorities have significantly lower probabilities of employing competitive procurement procedure. The bunching manipulation scheme significantly diminishes cost-effectiveness of public procurement. On average, prices of below threshold contracts are 18-28% higher when the authority has an elevated probability of bunching.

Keywords: Public Procurement; Manipulation; Competition; European Union

JEL Classification: C31, D44, H57

Suggested Citation

Tas, Bedri Kamil Onur, Bunching Below Thresholds to Manipulate Public Procurement (February 2019). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2019/17, Available at SSRN: https://ssrn.com/abstract=3341309 or http://dx.doi.org/10.2139/ssrn.3341309

Bedri Kamil Onur Tas (Contact Author)

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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