Rating Government Procurement Markets

Tatyana Deryugina (), Alminas Zaldokas, Anastassia Fedyk (), Yuriy Gorodnichenko, James Hodson () and Ilona Sologoub ()
Additional contact information
Tatyana Deryugina: University of Illinois at Urbana-Champaign
Alminas Zaldokas: National University of Singapore
Anastassia Fedyk: University of California at Berkeley
James Hodson: AI for Good
Ilona Sologoub: VoxUkraine

No 18257, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We develop a novel, scalable method for assessing the quality of public procurement systems using standard administrative data. Our approach compares the distribution of procurement opportunities to the distribution of contract awards across firms. We first derive a simple theoretical benchmark that relates the expected distribution of contract value winning firms, measured as a Herfindahl-Hirschman index (HHI), to the distribution of auction values, measured as a respective HHI, and the number of winning firms. Significant deviations of winning firms' HHI from this benchmark indicate potential governance failures such as corruption or unchecked collusion. Our method requires no subjective input, is transparent and reproducible, and allows for meaningful comparisons across countries, industry sectors, and over time. We use procurement data from Ukraine and EU member states in 2018-2021 to assess the performance of five large sectors. Ukraine's procurement performance in four of the five sectors is comparable to many other European countries, but Ukraine's construction sector consistently displays the largest excess concentration among all countries considered, consistent with anecdotal evidence of corruption in this sector.

Keywords: Ukraine; corruption; procurement; collusion (search for similar items in EconPapers)
JEL-codes: D73 H11 L10 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-cis, nep-des and nep-eur
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Related works:
Working Paper: Rating Government Procurement Markets (2025)
Working Paper: Rating Government Procurement Markets (2025)
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