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Bunching below thresholds to manipulate public procurement
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1028-3625
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EUI RSCAS; 2019/17; Global Governance Programme-338; [Global Economics]
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TAS, Bedri Kamil Onur, Bunching below thresholds to manipulate public procurement, EUI RSCAS, 2019/17, Global Governance Programme-338, [Global Economics] - https://hdl.handle.net/1814/61366
Abstract
I examine a manipulation scheme that public authorities can use to exercise more discretion in public procurement. I propose that regression discontinuity manipulation tests can be implemented to identify manipulative authorities. I investigate the European Union public procurement data set. I find that 10-13% of examined authorities have high probabilities of bunching estimated costs just below thresholds. Manipulative authorities have significantly lower probabilities of employing competitive procurement procedure. The bunching manipulation scheme significantly diminishes cost-effectiveness of public procurement. On average, prices of below threshold contracts are 18-28% higher when the authority has an elevated probability of bunching.