Ferenc Szucs in Journal of the European Economic Association
Ferenc Szucs, Assistant Professor of Economics, has published a paper about discretion and favoritism in public procurement, in the Journal of the European Economic Association.
Summary
Buyer's discretion in public procurement is a controversial issue. On the one hand, increasing discretion may reduce the administrative burden bureaucrats face and allow them to use their expertise to choose the best contractors. On the other hand, if incentives are misaligned, then high-discretion can give rise to political favoritism. This paper investigates this question using a policy reform in Hungary which increases buyer's discretion below a certain transaction value. I find that high-discretion results in higher prices and less productive but politically more connected contractors.
Last updated: April 13, 2023
Source: Department of Economics