Procuring Survival

Matilde Cappelletti, Leonardo Maria Giuffrida and Gabriele Rovigatti

No 18796, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the impact of public procurement on business survival. Using Italy as a laboratory, we construct a large-scale dataset of firms—covering balance-sheet, income-statement, and administrative records—and match it with public contract data. Employing a regression discontinuity design for close-call auctions, we find that winners are more likely to stay in the market than marginal losers after the award 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 business scale and that survivors experience no productivity premium. Securing contracts relaxes credit constraints and acts as a mechanism for survival.

Keywords: Firm survival; Firm dynamics; Public procurement; Credit (search for similar items in EconPapers)
JEL-codes: D44 H32 H57 (search for similar items in EconPapers)
Date: 2024-01
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Related works:
Journal Article: Procuring Survival (2024)
Working Paper: Procuring survival (2024)
Working Paper: Procuring Survival (2022)
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