Favouritism and Inefficiency in Procurement : Evidence from Public Works in Italy

This paper shows how favoritism in public procurement can emerge despite the use of rigid procedures for awarding contracts and of transparent criteria for allowing firms to bid.The paper analyzes data on the awarding of public works in Italy to illustrate how differences in fine regulation details across Italian local administrations have major implication in terms of favoritism toward local contractors and the overall efficiency of the procurement process. The findings are a cautionary tale about the benefits and risks of a decentralized procurement regulation and a warning about the problems facing green and innovation procurement