Discretion and Favoritism in Public Procurement

• 成果类型: Article
• 署名作者: Szucs, Ferenc
• 署名单位: Stockholm University
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1093/jeea/jvad017
• 发表日期: 2024
• 页码: 117-160
• 关键词: Incentives; allocation; CORRUPTION; selection; RISK

摘要

This paper investigates the consequences of bureaucratic discretion in public procurement. I exploit a Hungarian policy reform, which allows a high-discretion procedure below a certain contract value. At the threshold, I document large discontinuities both in procurement outcomes and in the density of contract values, which indicates that buyers manipulate contract values to avoid auctions. I combine the reform and a structural model to find that discretion increases prices and results in the selection of less productive contractors. I also show that high discretion benefits firms with connections to the party of the central government. I use the structural model to document that public buyers are willing to sacrifice more contract value to increase their discretion if more connected firms are operating in the market. I also use the model to simulate the effects of counterfactual procurement thresholds on different procurement outcomes.