Highway Procurement During the Great Recession and Stimulus

We study highway procurement in Texas during the Great Recession and stimulus period, finding increased competition with more bidders and lower bids. We argue that the recession reduced opportunity costs, in part due to a slump in private-sector construction. We evaluate costs and efficiency by developing methods to estimate an empirical auction model tailored for public bidding and demonstrate that contracts became more efficient and less costly. A counterfactual analysis confirms that infrastructure procurement during recessions not only stimulates the economy but also enables the government to complete necessary projects at lower costs.