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Tenure in Office and Public Procurement

Decio Coviello and Stefano Gagliarducci ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We study the impact of politicians' tenure in office on the outcomes of public procurement. To this purpose, we match a data set on the politics of Italian municipal governments to a data set on the procurement auctions they administered. In order to identify a causal relation, we apply two different identification strategies. First, we compare elections where the incumbent mayor barely won another term, with elections where the incumbent mayor barely lost and a new mayor took over. Second, we cross-validate these estimates using a unique quasi-experiment determined by the introduction of a two-term limit on the mayoral office in March 1993. This reform granted one potential extra term to mayors appointed before the reform. The main result is that an increase in the mayor's tenure is associated with ``worse' outcomes: fewer bidders per auction, a higher cost of procurement, a higher probability that the winner is local and that the same firm is awarded repeated auctions. Taken together, our estimates are informative of the possibility that time in office progressively leads to collusion between government officials and a few favored local bidders. Other interpretations receive less support in the data.

Keywords: tenure in office; procurement auctions; public works; term limit (search for similar items in EconPapers)
JEL-codes: D44 D72 D73 H57 H70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pol
Date: 2017-01
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Journal Article: Tenure in Office and Public Procurement (2017) Downloads
Working Paper: Tenure in Office and Public Procurement (2010) Downloads
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