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Small fish in a big (local) pond: EU directives, market concentration, and SME success in public procurement

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Abstract

This study examines the impact of local market concentration on the participation and success of small and medium enterprises (SMEs) in Swedish municipal cleaning service procurement auctions. A 10 percentage point reduction in the joint market share of the four largest firms (CR4), while maintaining a constant Herfindahl-Hirschman Index (HHI), results in a 7.5% increase in SME participation and raises the likelihood of an SME winning by 2.4%. Furthermore, the 2014 revisions to the EU public procurement directives mitigated the adverse effects of market concentration. However, despite the increase in participation, there is no evidence that the success rates of SMEs improved following the implementation of the revised EU directives.

Suggested Citation

  • Drake, Samielle, 2025. "Small fish in a big (local) pond: EU directives, market concentration, and SME success in public procurement," Umeå Economic Studies 1034, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:1034
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    More about this item

    Keywords

    Public Procurement; Market Concentration; SMEs; Competition; Regulations;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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