Bunching Below Thresholds to Manipulate Public Procurement

Bedri Tas

No 2019/17, RSCAS Working Papers from European University Institute

Abstract: I examine a manipulation scheme that public authorities can use to exercise more discretion in public procurement. I propose that regression discontinuity manipulation tests can be implemented to identify manipulative authorities. I investigate the European Union public procurement data set. I find that 10-13% of examined authorities have high probabilities of bunching estimated costs just below thresholds. Manipulative authorities have significantly lower probabilities of employing competitive procurement procedure. The bunching manipulation scheme significantly diminishes cost-effectiveness of public procurement. On average, prices of below threshold contracts are 18-28% higher when the authority has an elevated probability of bunching.

Keywords: Public Procurement; Manipulation; Competition; European Union (search for similar items in EconPapers)
JEL-codes: C31 D44 H57 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-com, nep-cta and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:rsc:rsceui:2019/17

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