Procurement with Manipulation

76 Pages Posted: 5 Jul 2024

See all articles by Giancarlo Spagnolo

Giancarlo Spagnolo

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

Clarissa Lotti

University of Tor Vergata

Decio Coviello

HEC Montreal

Andrea Guglielmo

Analysis Group, Inc.

Multiple version iconThere are 3 versions of this paper

Abstract

Using data from Italian public works, we study whether and which procuring administrationsmanipulate the value of contracts to avoid crossing regulatory thresholds that limit discretion,and how this impacts procurement outcomes. We use bunching estimators to document substantialmanipulation just below these thresholds, mainly performed by administrations led byappointed officials but not by elected ones. For the manipulating administrations, we estimatethe effects of manipulation and find that it increases the use of discretionary procedures (restrictedauctions), thereby reducing the number of bidders, works’ length, delays in delivery, andcost overruns, with mixed effects on rebates. Manipulation also increases repeated awards ofcontracts to less financially risky suppliers. We cross-validate our estimates using a reform thatlowered the thresholds and find less use of discretion, and higher procurement costs because ofincreased delays. A simple model where administrations may choose to manipulate the value ofcontracts provides guidance to our empirical analysis.

Keywords: rules, discretion, bunching, thresholds, electoral accountability, bureaucracy, government performance

Suggested Citation

Spagnolo, Giancarlo and Lotti, Clarissa and Coviello, Decio and Guglielmo, Andrea, Procurement with Manipulation. Available at SSRN: https://ssrn.com/abstract=4886492 or http://dx.doi.org/10.2139/ssrn.4886492

Giancarlo Spagnolo (Contact Author)

University of Rome Tor Vergata ( email )

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

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

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

Clarissa Lotti

University of Tor Vergata ( email )

Decio Coviello

HEC Montreal ( email )

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

Andrea Guglielmo

Analysis Group, Inc. ( email )

111 Huntington Avenue
10th floor
Boston, MA 02199
United States

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