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Essays on firms, competition and public procurement

Brugues Rodriguez, Javier Brugués; (2020) Essays on firms, competition and public procurement. Doctoral thesis (Ph.D), UCL (University College London). Green open access

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Abstract

This thesis consists of three chapters that study the interaction between public procurement and firms’ behavior. Chapters 1 and 2 study the pharmaceutical market in Ecuador, where, as in many middle-income countries, large public and private sectors coexist. Since the same set of firms often serve both sectors, there are important dependencies in the firms’ decisions across sectors that can affect medicine supply. Using a novel dataset, in Chapter 1, I provide reduced-form evidence that firms’ pricing decisions in the public and private sectors, indeed, respond to cross-sector incentives. Motivated by this evidence, in Chapter 2, I develop and estimate a model in which firms compete in auctions in the public sector and in prices in the private market. I use the model to quantify the effects of increasing the number of participants in the auction, changing the reserve prices, and introducing local-preference rules in the auction on the supply decisions in both sectors. Chapter 3, co-authored with Felipe Brugués and Samuele Giambra, uses detailed ownership information of private firms in Ecuador and the identity of the universe of bureaucrats to provide evidence of the welfare consequences of the misallocation of public procurement contracts due to political connections. Using an event study design, we show that after establishing a political connection, firms are more likely to win government contracts and charge, on average, 7% higher prices than unconnected firms. Production function estimates reveal that politically connected firms are, on average, less efficient. We propose a framework to estimate the losses to society that derive from the under-provision of public services caused by price inflation and from the excess costs generated by the misallocation of government contracts.

Type: Thesis (Doctoral)
Qualification: Ph.D
Title: Essays on firms, competition and public procurement
Event: UCL
Open access status: An open access version is available from UCL Discovery
Language: English
Additional information: Copyright © The Author 2020. Original content in this thesis is licensed under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) Licence (https://creativecommons.org/licenses/by/4.0/). Any third-party copyright material present remains the property of its respective owner(s) and is licensed under its existing terms. Access may initially be restricted at the author’s request.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10096975
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