This research project aims to study supply-side competition in the public procurement market by assessing firms’ choices to participate in public tenders. While competition in general has been shown to have positive effects on a range of economic outcomes, recent studies have demonstrated alarmingly low levels of competition in public procurement. In particular, it seems that few firms submit bids to a given public tender, which is all the more alarming when taking into account frequently reported inefficiencies in procurement outcomes and the associated welfare loss from a taxpayer perspective. We intend to identify the mechanisms behind firms’ participation decisions by running large-scale surveys with a representative sample of German firms. Respondents face a battery of questions about (perceived) barriers to procurement and possible policy solutions. By employing modern machine-learning methods, we will extract the most frequent obstacles and their determinants. We can match survey answers to administrative data from several sources of detailed firm data which allows us a deeper understanding of the role of firm perceptions in public procurement. We will organize the survey by taking a randomized sample of the universe of German firms from the Mannheimer Unternehmenspanel (MUP).

Project duration

01.01.2020 - 31.12.2021

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Departments

Corporate Taxation and Public Finance