Procuring survival

Matilde Cappelletti (), Leonardo Maria Giuffrida () and Gabriele Rovigatti
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Matilde Cappelletti: University of Mannheim and ZEW Mannheim
Leonardo Maria Giuffrida: ZEW Mannheim, MaCCI and CESifo

No 1439, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: In this paper, we investigate the impact of public procurement on business survival. Using Italy as a case study, we construct a large-scale dataset of firms covering balance-sheets, income-statements, and administrative records and match these data with public contract data. Employing a regression discontinuity design for close-call auctions, we find that winners are subsequently more likely to stay in the market than marginal losers and that the boost in survival chances lasts longer than the contract duration. We document that this effect is associated with earnings substitution rather than increased total revenue and that winners experience no increase in productivity. Securing contracts relaxes credit constraints and acts as a mechanism to foster survival.

Keywords: firm survival; firm dynamics; public demand; public procurement; demand shocks; productivity; credit; auctions; regression discontinuity design (search for similar items in EconPapers)
JEL-codes: D25 D44 H32 H57 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-eec, nep-ent and nep-sbm
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Related works:
Working Paper: Procuring Survival (2022)
Working Paper: Procuring survival (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1439_24

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