An empirical analysis of the impacts of competition on procurement costs

Mariano Matilla-García and Pilar Vega

Applied Economics, 2025, vol. 57, issue 40, 6258-6273

Abstract: This paper empirically analyses the effect of a competitive environment on the cost of procurement. We exploit a dataset based on the Spanish procurement award notices for the years 2012–2017. After controlling for possible endogeneity, we show that a more competitive environment significantly reduces the cost of Spanish procurement. In particular, the use of the open procedure, the most competitive one, would reduce the procurement price by 9.9%, while the increase by one unit of the number of participants would on average lead to a 2.1% decrease in the procurement price. Consequently, a more extensive use of the open procedure would generate savings of €354 millions per year. These findings can have an important effect on the public deficit of a country.

Date: 2025
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DOI: 10.1080/00036846.2024.2382934

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