American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Indirect Savings from Public Procurement Centralization
American Economic Journal: Economic Policy
vol. 16,
no. 3, August 2024
(pp. 347–66)
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.Citation
Lotti, Clarissa, Arieda Muço, Giancarlo Spagnolo, and Tommaso Valletti. 2024. "Indirect Savings from Public Procurement Centralization." American Economic Journal: Economic Policy, 16 (3): 347–66. DOI: 10.1257/pol.20220357Additional Materials
JEL Classification
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- H57 National Government Expenditures and Related Policies: Procurement
- H83 Public Administration; Public Sector Accounting and Audits
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