4/27/2016 - Dina Pomeranz (Harvard) - "Can Audits Backfire? Evidence from Public Procurement in Chile"

Presentation Date: 

Wednesday, April 27, 2016


CGIS Knafel K354

Title: "Can Audits Backfire? Evidence from Public Procurement in Chile"

Abstract: The government is the biggest buyer in the economy of most countries. At the same time, the public procurement process if often thought to be fraught with waste and corruption. For this reason, many governments try to promote the use of online auctions instead of direct contracting by public entities. We analyze the  impact of audits aimed at reducing such malpractice in public procurement on public entities' subsequent procurement practices in Chile. For identi cation, we exploit a scoring rule of the national auditing agency, which allows for regression discontinuity analysis. Surprisingly, the audits lead to a shift away from online auctions and towards higher use of the less transparent and more discretionary modality of procurement through direct contracting. The share of the value of total purchases through direct contracts increases by about 7 percentage points, at the expense of the use of public auctions.

See also: 2016