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Title: Essays on firms, competition and public procurement
Author: Brugues Rodriguez, Javier Brugués
ISNI:       0000 0004 9353 3374
Awarding Body: UCL (University College London)
Current Institution: University College London (University of London)
Date of Award: 2020
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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.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available