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To bid or not to bid: That is the question: Public procurement,project complexity and corruption
Institution:1. Italian Transport Authority, Italy;2. University of Genova, Italy;3. University of Bologna, Italy;1. CERGE-EI, Politickych veznu 7, 11121 Prague, Czech Republic;2. CEPR, London, United Kingdom;3. Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Str. 10, 53113 Bonn, Germany;1. College of Business and Economics, Australian National University, 26C Kingsley Street Acton, ACT 2601, Australia;2. Department of Economics, University of California at Berkeley, 530 Evans Hall #3880, Berkeley, CA 94720-3880, United States;3. Faculty of Economics, Kindai University, Kowakae 3-4-1, Higashiosaka 522-8502, Japan;1. University Ca'' Foscari, Venice, Fondamenta San Giobbe — Cannaregio, 873, 30121 Venezia, Italy;2. University of Cape Town (RSA), Private Bag, Rondebosch, 7701 Cape Town, South Africa;3. University of Perugia, Via Alessandro Pascoli, 06123 Perugia, Italy
Abstract:The main aim of this study is to improve our comprehension of the role played by project complexity and institutional quality as possible drivers of the choice between open auctions and negotiations in a sample of Italian municipalities. Controlling for project characteristics, for observed and unobserved heterogeneity at municipality level, our main results suggest that projects that are more complex are more likely to be procured with negotiated procedures. On average, a rise in the project complexity index from the 25th to the 75th percentile of its distribution increases the probability of procuring the project with a negotiated procedure by about 6%–8%. However, our results also suggest that the impact of complexity might be more relevant in the case of projects procured by municipalities located in provinces characterized by low levels of corruption. Moreover, we also find that complex projects are associated to longer delays in their execution, larger rebates and to higher probabilities to be awarded to local firms.
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