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Indirect Savings from Public Procurement Centralization

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  • Clarissa Lotti
  • Arieda Muço
  • Giancarlo Spagnolo
  • Tommaso Valletti

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.

Suggested Citation

  • Clarissa Lotti & Arieda Muço & Giancarlo Spagnolo & Tommaso Valletti, 2024. "Indirect Savings from Public Procurement Centralization," American Economic Journal: Economic Policy, American Economic Association, vol. 16(3), pages 347-366, August.
    • Handle: RePEc:aea:aejpol:v:16:y:2024:i:3:p:347-66
    DOI: 10.1257/pol.20220357
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    1. Francesco Decarolis & Gaétan de Rassenfosse & Leonardo M. Giuffrida & Elisabetta Iossa & Vincenzo Mollisi & Emilio Raiteri & Giancarlo Spagnolo, 2021. "Buyers' role in innovation procurement: Evidence from US military R&D contracts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(4), pages 697-720, November.
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    4. Martin Huber & Andreas Steinmayr, 2021. "A Framework for Separating Individual-Level Treatment Effects From Spillover Effects," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 39(2), pages 422-436, March.
    5. Clément de Chaisemartin & Xavier d'Haultfoeuille & Yannick Guyonvarch, 2019. "DID_MULTIPLEGT: Stata module to estimate sharp Difference-in-Difference designs with multiple groups and periods," SciencePo Working papers Main hal-03946768, HAL.
    6. Clark, Robert & Coviello, Decio & de Leverano, Adriano, 2021. "Centralized procurement and delivery times: Evidence from a natural experiment in Italy," ZEW Discussion Papers 21-063, ZEW - Leibniz Centre for European Economic Research.
    7. Dimitri,Nicola & Piga,Gustavo & Spagnolo,Giancarlo (ed.), 2006. "Handbook of Procurement," Cambridge Books, Cambridge University Press, number 9780521870733, January.
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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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