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Where or whom to contract? An empirical study of political spillovers in public procurement

Pedro Camões and João Cerejeira ()

Portugal Stata Conference 2020 from Stata Users Group

Abstract: A growing body of empirical research details how public procurement processes deviate from the competitive, efficient outcomes. In particular, municipal public procurement decisions are both affected by geographical proximity and political considerations. This presentation extends the analysis that by now has solely focused on single municipalities and poses the hypothesis they are also affected by political proximity. Specifically, it asks if there is a relation between the political parties in power in Portuguese municipalities and the frequency of contracts awarded to a given firm? We rely on a dataset ("") with information on all bids by private firms and all contracts awarded by the 308 Portuguese municipalities in the period between 2008 and 2017. This includes three electoral cycles and more than 250,000 contracts. Our results show that municipalities are more likely to award contracts to firms have won in other municipalities led by the same political party. This political proximity effect is robust to virtually all controls, including geographic proximity. This result has political and public governance implications.

Date: 2020-08-20
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