Political donations, public procurement and government efficiency
Kristof De Witte and
No 7591, CESifo Working Paper Series from CESifo Group Munich
Firms’ political donations can induce distortions in the allocation of public procurement contracts. In this article, we employ an advanced non-parametric efficiency model to study the public sector (cost) efficiency implications of such distortions. Using a unique dataset covering the Czech regions over the 2007-2014 period, we find that the efficiency of public good provision is lower when a larger share of public procurement contracts is awarded to firms donating to the party in power (‘party donors’). We link this efficiency difference to two underlying mechanisms: i.e. shifts in procurement contract allocations from firms with previous procurement experience to party donors, and the use of less restrictive allocation procedures that benefit party donors.
Keywords: political connections; non-parametric efficiency analysis; benefit-of-the-doubt (search for similar items in EconPapers)
JEL-codes: H57 D72 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-eff, nep-eur, nep-pol, nep-reg and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7591
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