Determinants of direct cross-border public procurement in EU Member States

The aim of this paper is to analyse the determinants of direct cross-border public procurement in the EU Member States. For this purpose, we use a unique dataset based on data published on Tenders Electronic Daily which covers public procurement contract award notices for the 2008–2012 period and consists of more than 30 variables. Among others, results of the econometric estimation suggest that the probability of awarding a contract cross-border depends positively on the value of the contract and negatively on the number of bids. Among awarding country characteristics, GDP per capita and trade-to-GDP ratio are found to positively impact the probability of a cross-border award. Our results also provide econometric evidence for predictions from the economic theory. We make the case for the importance of product market regulation indicators used as proxies for anticompetitive practices, such as regulatory protection of incumbent firms and barriers to foreign direct investment, as well as the scope of public enterprises, and show that they have a significant negative impact on the probability of a cross-border win.