Anatomy of Public Procurement

VATT Institute for Economic Research Working Papers 118

41 Pages Posted: 14 May 2019

See all articles by Jan Jääskeläinen

Jan Jääskeläinen

affiliation not provided to SSRN

Janne Tukiainen

VATT Institute for Economic Research; University of Turku - Turku School of Business - Department of Economics

Date Written: April 11, 2019

Abstract

We provide novel stylized facts about competition, bidding, entry and bidders across a wide spectrum of public procurement auctions using comprehensive and rich Finnish data. Competition for publicly procured contracts is relatively low with a median bidder count of two (three conditional on receiving any bids). Bidders typically are very heterogeneous in size, which likely limits competition further. Competition seems to work roughly as expected as on average (standardized) bids mainly decrease with the number of actual and potential bidders. Using information on registrations as a good proxy for potential bidders, we show that the ratio of actual to potential bidders increases with the number of actual bidders. We also show that being present in the contracting authority's municipality or province correlates positively with registering, entry (bidding) and winning, but other firm characteristics matter less. While attracting more competition by means of contract and auction rule design is a desirable policy goal and we show suggestive evidence that the use of scoring rule can be an entry barrier, increasing competition may be in practice difficult. Therefore, reservation prices may be a more useful policy tool to alleviate issues associated with the lack of competition.

Keywords: Competition, Entry, Public Procurement

JEL Classification: D44, H57, H76, L11

Suggested Citation

Jääskeläinen, Jan and Tukiainen, Janne, Anatomy of Public Procurement (April 11, 2019). VATT Institute for Economic Research Working Papers 118. Available at SSRN: https://ssrn.com/abstract=3372135 or http://dx.doi.org/10.2139/ssrn.3372135

Jan Jääskeläinen

affiliation not provided to SSRN

Janne Tukiainen (Contact Author)

VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00101
Finland

University of Turku - Turku School of Business - Department of Economics ( email )

Rehtorinpellonkatu 3
Turku, 20014
Finland

Register to save articles to
your library

Register

Paper statistics

Downloads
26
Abstract Views
149
PlumX Metrics