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Manipulation of Procurement Contracts: Evidence from the Introduction of Discretionary Thresholds

Ján Palguta and Filip Pertold

American Economic Journal: Economic Policy, 2017, vol. 9, issue 2, 293-315

Abstract: We present evidence of how policies that create opportunities to avoid open competition in procurement lead to the manipulation of procurement values. We exploit a policy reform in which public bodies were given the autonomy to preselect potential contractors below newly defined discretionary thresholds. Manipulation is revealed through bunching of procurements just below the thresholds in construction works and services, and to a lesser degree, in goods. Among manipulated contracts, we document a threefold increase in the probability that procurements are allocated to anonymous firms, which can hide their owners. This sorting violates assumptions behind regression-discontinuity designs.

JEL-codes: D73 D86 H57 K23 L74 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/pol.20150511
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Handle: RePEc:aea:aejpol:v:9:y:2017:i:2:p:293-315