Centralization of public procurement can lower prices for the government's direct purchase of goods and services. This paper focuses on indirect savings. Public administrations that do not procure directly through a central procurement agency might benefit from the availability of centrally procured goods. We exploit the introduction of a central purchasing agency in Italy and find that prices came down by 22 percent among administrations that bought autonomously. These indirect effects appear to be driven by informational externalities, especially for less competent public buyers purchasing technologically more complex goods. Accounting for indirect savings increases the estimate of direct ones.

Lotti, C., Muço, A., Spagnolo, G., Valletti, T. (2024). Indirect savings from public procurement centralization. AMERICAN ECONOMIC JOURNAL. ECONOMIC POLICY, 16(3), 347-366 [10.1257/pol.20220357].

Indirect savings from public procurement centralization

Lotti, C.;Spagnolo, G.;
2024-08-03

Abstract

Centralization of public procurement can lower prices for the government's direct purchase of goods and services. This paper focuses on indirect savings. Public administrations that do not procure directly through a central procurement agency might benefit from the availability of centrally procured goods. We exploit the introduction of a central purchasing agency in Italy and find that prices came down by 22 percent among administrations that bought autonomously. These indirect effects appear to be driven by informational externalities, especially for less competent public buyers purchasing technologically more complex goods. Accounting for indirect savings increases the estimate of direct ones.
3-ago-2024
Pubblicato
Rilevanza internazionale
Articolo
Nessuno
Settore SECS-P/02
Settore ECON-02/A - Politica economica
English
10.2139/ssrn.4359380
Lotti, C., Muço, A., Spagnolo, G., Valletti, T. (2024). Indirect savings from public procurement centralization. AMERICAN ECONOMIC JOURNAL. ECONOMIC POLICY, 16(3), 347-366 [10.1257/pol.20220357].
Lotti, C; Muço, A; Spagnolo, G; Valletti, T
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/389303
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