EconPapers    
Economics at your fingertips  
 

Political donations and the allocation of public procurement contracts

Vítězslav Titl () and Benny Geys

European Economic Review, 2019, vol. 111, issue C, 443-458

Abstract: We study whether and when firms’ donations to political parties induce favouritism in public procurement allocations. Our analysis builds on a unique, comprehensive dataset covering all public procurement contracts and all corporate donations to major political parties in the Czech Republic over the period from 2007 to 2014, and exploits changes in political control over regional governments within this period for identification purposes. We find that firms donating 10% more to a political party gaining (losing) power witness an increase (decrease) in the value of their public procurement contracts by 0.5–0.6%. Importantly, and in line with theoretical expectations, these effects only arise for contracts allocated under less restrictive procurement allocation processes. Assessing the underlying mechanisms, we show that donating firms receive more small contracts allocated under less regulated procurement procedures, face less competition in more regulated and open procurement procedures, and tend to win with bids further above the estimated cost of the procurement contract.

Keywords: Political connections; Public procurement; Campaign contributions; Czech Republic (search for similar items in EconPapers)
JEL-codes: H57 D72 C23 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292118301843
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:111:y:2019:i:c:p:443-458

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-03-31
Handle: RePEc:eee:eecrev:v:111:y:2019:i:c:p:443-458