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Procuring Medical Devices: Evidence from Italian Public Tenders

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  • Decarolis, Francesco
  • Atella, Vincenzo

Abstract

The public procurement of medical devices is increasingly relying on auction mechanisms to move toward more transparent procedures and to promote competition between suppliers in a market where the quality of the products matters enormously and an improper auction design could be very harmful. Based on Italian hospital data, we present new evidence on the performance of the public tenders to procure orthopaedic prosthesis for hips, knees and shoulders. Focusing on three main outcomes, the number of participants, the presence of a single firm bidding and the winning rebate, for the first time we describe how features related to the tender, hospital, region and bidders' competition all contribute to explain the functioning of the procurement auctions. The evidence we obtain can meaningfully help policy makers in designing and implementing better public procurement systems.

Suggested Citation

  • Decarolis, Francesco & Atella, Vincenzo, 2019. "Procuring Medical Devices: Evidence from Italian Public Tenders," CEPR Discussion Papers 14044, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14044
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    1. Yonatan Gur & Lijian Lu & Gabriel Y. Weintraub, 2017. "Framework Agreements in Procurement: An Auction Model and Design Recommendations," Manufacturing & Service Operations Management, INFORMS, vol. 19(4), pages 586-603, October.
    2. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
    3. Calogero Guccio & Giacomo Pignataro & Ilde Rizzo, 2006. "Efficiency of Procurement Procedures for Medical Devices," Rivista di Politica Economica, SIPI Spa, vol. 96(1), pages 135-158, January-F.
    4. Mercedes Vellez, 2011. "Auctions versus Negotiations: Evidence from Public Procurement in the Italian Healthcare Sector," CEIS Research Paper 191, Tor Vergata University, CEIS, revised 29 Mar 2011.
    5. Matthew Grennan, 2013. "Price Discrimination and Bargaining: Empirical Evidence from Medical Devices," American Economic Review, American Economic Association, vol. 103(1), pages 145-177, February.
    6. Brian Merlob & Charles R. Plott & Yuanjun Zhang, 2012. "The CMS Auction: Experimental Studies of a Median-Bid Procurement Auction with Nonbinding Bids," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(2), pages 793-827.
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    Cited by:

    1. de Leverano, Adriano, 2019. "Collusion through market sharing agreements: Evidence from Quebec's road paving market," ZEW Discussion Papers 19-053, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    Procurement auctions; Medical devices; Orthopaedic prosthesis; Tender characteristics; Italy;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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