Auctions versus Negotiations: Evidence from Public Procurement in the Italian Healthcare Sector

Vellez Mercedes
CEIS Research Paper
This paper contributes to the empirical literature on auctions and negotiations. Using healthcare facilities data on procurement contracts, I find evidence that auctions do not yield lower prices than negotiations. This result is robust to specifications tackling quality differences, endogenous participation, and the bilateral and multilateral nature of negotiated procedures. I also find evidence that late payments reduce competition and thus affect firms’ participation choices. A simple test based on Benford’s Law is used to rule out collusion among participants as a possible explanation of the results.
Number: 191
Keywords: Auctions; negotiations; procurement; medical technology; competition; endogeneity; collusion.
JEL codes: H57, C36, I18
Date: Thursday, March 31, 2011
Revision Date: Thursday, March 31, 2011