Political Donations, Public Procurement and Government Efficiency

24 Pages Posted: 19 Apr 2019

See all articles by Vítězslav Titl

Vítězslav Titl

Utrecht University - School of Economics

K. De Witte

University of Leuven (KUL); Maastricht University

Benny Geys

BI Norwegian Business School; Vrije Universiteit Brussel (VUB) - Applied Economics Department

Date Written: 2019

Abstract

Firms’ political donations can induce distortions in the allocation of public procurement contracts. In this article, we employ an advanced non-parametric efficiency model to study the public sector (cost) efficiency implications of such distortions. Using a unique dataset covering the Czech regions over the 2007-2014 period, we find that the efficiency of public good provision is lower when a larger share of public procurement contracts is awarded to firms donating to the party in power (‘party donors’). We link this efficiency difference to two underlying mechanisms: i.e. shifts in procurement contract allocations from firms with previous procurement experience to party donors, and the use of less restrictive allocation procedures that benefit party donors.

Keywords: political connections, non-parametric efficiency analysis, benefit-of-the-doubt

JEL Classification: H570, D720, C230

Suggested Citation

Titl, Vítězslav and De Witte, Kristof and Geys, Benny, Political Donations, Public Procurement and Government Efficiency (2019). CESifo Working Paper No. 7591, Available at SSRN: https://ssrn.com/abstract=3374583 or http://dx.doi.org/10.2139/ssrn.3374583

Vítězslav Titl (Contact Author)

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

HOME PAGE: http://www.titl.name

Kristof De Witte

University of Leuven (KUL) ( email )

Naamsestraat 69
Leuven, Vlaams Brabant B-3000
Belgium

HOME PAGE: http://www.feb.kuleuven.be

Maastricht University ( email )

Boschstraat 24
Maastricht, Vlaams-Brabant 6211 AX
Netherlands
003216326656 (Phone)

HOME PAGE: http://www.feb.kuleuven.be

Benny Geys

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

Vrije Universiteit Brussel (VUB) - Applied Economics Department ( email )

Pleinlaan 2
1040 Etterbeek
Brussel, CA 1040
Belgium

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