Rethinking Discretion in Public Procurement

63 Pages Posted: 30 Sep 2022 Last revised: 23 Jan 2023

See all articles by Dimas Fazio

Dimas Fazio

National University of Singapore (NUS) - Department of Finance

Date Written: September 8, 2022


Exploiting a rule in Brazil that waives competitive bidding for small-value purchases, I find evidence of an efficiency-quality trade-off when government agencies have more flexibility in awarding public procurement contracts. Products purchased with higher discretion are 16% more expensive than those purchased via regulated auctions. However, about two-fifths of this overpricing is explained by the purchase of higher-quality products. Additionally, discretion can improve the quality of public services, as demonstrated by lower inpatient mortality rates at hospitals that use discretion to purchase better essential medicines. These findings suggest that regulations on discretion should balance efficiency and quality considerations.

Keywords: product quality, efficiency, auctions, bid waivers

JEL Classification: L15, H57, D73

Suggested Citation

Fazio, Dimas, Rethinking Discretion in Public Procurement (September 8, 2022). Available at SSRN: or

Dimas Fazio (Contact Author)

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics