Manipulation of Procurement Contracts: Evidence from the Introduction of Discretionary Thresholds
American Economic Journal: Economic Policy
vol. 9,
no. 2, May 2017
(pp. 293-315)
Abstract
We present evidence of how policies that create opportunities to avoid open competition in procurement lead to the manipulation of procurement values. We exploit a policy reform in which public bodies were given the autonomy to preselect potential contractors below newly defined discretionary thresholds. Manipulation is revealed through bunching of procurements just below the thresholds in construction works and services, and to a lesser degree, in goods. Among manipulated contracts, we document a threefold increase in the probability that procurements are allocated to anonymous firms, which can hide their owners. This sorting violates assumptions behind regression-discontinuity designs.Citation
Palguta, Ján, and Filip Pertold. 2017. "Manipulation of Procurement Contracts: Evidence from the Introduction of Discretionary Thresholds." American Economic Journal: Economic Policy, 9 (2): 293-315. DOI: 10.1257/pol.20150511Additional Materials
JEL Classification
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D86 Economics of Contract: Theory
- H57 National Government Expenditures and Related Policies: Procurement
- K23 Regulated Industries and Administrative Law
- L74 Construction
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