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Border Effects in European Public Procurement

Benedikt Herz and Xose-Luis Varela-Irimia ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper documents border effects in public procurement in the European Union Single Market. We use a data set of 2.3 million European public procurement contracts awarded between 2010 and 2014 to estimate a gravity model of bilateral procurement flows between European NUTS3 region pairs. Controlling for numerous variables, we find border effects on both the intra- and international level. Cross-national border effects are especially sizeable: firms located in the home region of the tendering authority are about 1300 times more likely to be awarded a contract than foreign firms. Our results hold for goods, services, and construction works procurement and cannot be explained by common currency, same language, and variables capturing cultural distance.

Keywords: public procurement; public contract; border effect; home bias; cross-border; gravity model; European Union; Single Market (search for similar items in EconPapers)
JEL-codes: F14 F15 H57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur and nep-int
Date: 2016-11-10, Revised 2017-01-24
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