Effect of public procurement regulation on competition and cost-effectiveness

Abstract

This paper empirically investigates the impact of public procurement regulation quality on competition and cost-effectiveness. I employ the World Bank’s Benchmarking Public Procurement quality scores. Using extensive data about public procurement in the European Economic Area, Switzerland, and Macedonia, the paper exhibits positive effects of improved regulation quality. Better quality scores are associated with higher levels of competition and cost-effectiveness. Improved regulation quality significantly increases number of bidders and the probability that procurement price is lower than estimated cost.