Indirect Savings from Public Procurement Centralization

Clarissa Lotti () and Giancarlo Spagnolo ()
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Clarissa Lotti: University of Rome "Tor Vergata", http://www.ceistorvergata.it
Giancarlo Spagnolo: Stockholm University, University of Rome Tor Vergata, EIEF, and CEPR

No 532, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: An influential study by Bandiera, Prat and Valletti (2009) exploits the introduction of a central purchasing agency in Italy to identify the amount and sources of public waste. Among other findings, it estimates that purchasing through a central agency directly saves 28% on prices. We find that centralized prices also have significant indirect effects, leading to a 17.7% reduction among non-centralized ones. The indirect effects of centralization appear driven by informational externalities – rather than an improved outside option – on less competent public buyers purchasing more complex goods. Accounting for indirect savings also increases the estimate of direct ones.

Keywords: Centralization; Informational externalities; Procurement; Public Contracts (search for similar items in EconPapers)
JEL-codes: D44 H11 H57 H83 L38 L88 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2022-02-01, Revised 2022-02-01
New Economics Papers: this item is included in nep-cta, nep-cwa, nep-eur and nep-his
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Citations: View citations in EconPapers (1)

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