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Political competition in local governments and public procurement
Palguta, Ján
Municipalities in the Czech Republic manage 23.9% of the total public expenditure (approximately 10% of the GDP), with approximately half of these funds redistributed through public procurement. This is a very significant amount of public resources that should be given due attention. This analysis demonstrates that the composition of municipal governments significantly influences the process of public procurement. Our methodology allows to interpreting the estimated relationships as causal, rather than as mere correlations.
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Political party donors on the public procurement market
Palguta, Ján
Entrepreneurs who make donations to political parties in the Czech Republic have a considerable share in the public procurement market. From 2007 to 2013, political donors were awarded 16.3 percent of public procurement contracts, which amounts to 16.6 percent of the contracts value. On average, the annual value of public procurements awarded to political donors was 32.8 billion CZK, which amounts to 0.7 percent of the GDP. Our analysis cannot determine whether contracting authorities select political donors using less transparent tender procedures in order to choose effective contractors who have proven themselves to the contracting authority in the past, or whether the political donations play a part in the selection process.
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What does (a lack of) transparency in public procurement lead to?
Palguta, Ján ; Pertold, Filip
In 2006 a simplified regime for awarding public contracts was introduced, by means of a special procedure for "below threshold" contracts. Its aim was to enable smaller contracts to be awarded in a simpler and more flexible way. However, this change began to reduce competition and transparency, and gave contract awarders freedoms they could easily abuse. For this reason, the original maximum threshold for contracts that could be awarded via the simplified procedure (20 million CZK) was reduced to half that amount in 2012. Introducing these thresholds led, among other things, to contracts' estimated values being manipulated, and to prices being artificially "inflated" towards the threshold. These behaviours were most frequently observed in the building sector. As the number of public tenders rises and their estimated values cluster more and more closely to the legal threshold for the simplified procedure, inefficiency increases, i.e. the difference between the estimated and actual price of the tenders increases. This difference is up to 15 percentage points greater than in open competitions.
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Rent-seeking in public procurement: evidence from the entry of political challengers at electoral thresholds
Palguta, Ján
This paper shows that political challengers affect rent-seeking in public procurement. I use data from municipal governments in the Czech Republic to construct new measures of political rent-seeking in procurement and test whether the entry of additional challengers into municipal legislatures affects the rent-seeking practices. Because the entry of challengers is endogenous to the performance of incumbents, I predict the challenger entry using quasi-random variation in the vote share of challengers near the threshold in proportional elections. I show that legislatures with additional challengers allocate fewer procurements to political donors, double price savings in procurement and use more competitive procurement auctions. The entry of extra challengers leads to greater economic benefits in legislatures with fewer political parties and in legislatures entered by local-level political movements. My findings highlight the role of local-level movements in enhancing political accountability and the value of monitoring the behavior of politicians.
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Concealed ownership of contractors, manipulation of tenders and the allocation of public procurement contracts
Palguta, Ján
This study provides evidence of a strong link between two channels facilitating rent-extraction in public procurement: between concealing the ultimate ownership of contractors and manipulation of the anticipated value of tenders. Using data on more than 15 300 tenders awarded to joint-stock companies in the Czech Republic during 2005 - 2010, the study shows that tender value manipulation has been incentivized by the 2006 procurement reform, which extablished several discontinuities in the anticipated value of tenders.
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Nonlinear incentive schemes and corruption in public procurement: evidence from the Czech Republic
Palguta, Ján
This article uses data on Czech public procurement contracts from 2005 - 2010 in order to uncover patterns suggestive of corrupt behavior of procuring officials. Using polynomial regressions and local linear density estimators, the article provides evidence that procurement officials manipulate anticipated values of procurements so that contracts can be awarded through less transparent procedures with restricted entry. Manipulations manifest through emergence of sharp discontinuities in the anticipated value distribution. Procurements excessively bunch below statutory thresholds, which determine officials’ scope of discretion, entry-restrictiveness and transparency of the contract-awarding process.
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MARKET FOR ATTENTION: CONSEQUENCES OF INFORMATIONAL GAPS ON PERFORMANCE OF MASS MEDIA
Palguta, Ján ; Tegze, Miron (advisor) ; Kollar, Miroslav (referee)
In my dissertation I examine the mutual relationship between a company in mass media market and its customers, where the company enjoys an informational advantage over its customers about the quality of the provided information goods. The mass media companies compete for customers? attention, i.e. for the total number of watchers, readers, subscribers, etc., because that determines their profits. The document analyses the market mechanisms under information asymmetry and adds to the standard analysis of supply and demand the notion on the quality of the exchanged service. The principal aim of this work is to economically explain the contemporary trends of scandal-mongering, sensationalism, unprofessional and unethical practices in the mass media market and by the reputation theory describe the behaviour of companies trying to protect their goodwill. The work comments on the welfare implications of the existing market structure and it suggests procedures available for overcoming of the information asymmetry.
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Market for attention: consequences of informational gaps on performance of mass media
Palguta, Ján ; Tegze, Miron (advisor) ; Kollár, Miroslav (referee)
In my dissertation I examine the mutual relationship between a company in mass media market and its customers, where the company enjoys an informational advantage over its customers about the quality of the provided information goods. The mass media companies compete for customers? attention, i.e. for the total number of watchers, readers, subscribers, etc., because that determines their profits. The document analyses the market mechanisms under information asymmetry and adds to the standard analysis of supply and demand the notion on the quality of the exchanged service. The principal aim of this work is to economically explain the contemporary trends of scandal-mongering, sensationalism, unprofessional and unethical practices in the mass media market and by the reputation theory describe the behaviour of companies trying to protect their goodwill. The work comments on the welfare implications of the existing market structure and it suggests procedures available for overcoming of the information asymmetry.
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