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Border Effects in European Public Procurement

Herz, Benedikt and Varela-Irimia, Xosé-Luís (2016): Border Effects in European Public Procurement.

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This paper documents border effects in public procurement in the European Union Single Market. We use a data set of 2.3 million European public procurement contracts awarded between 2010 and 2014 to estimate a gravity model of bilateral procurement flows between European NUTS3 region pairs. Controlling for numerous variables, we find border effects on both the intra- and international level. Cross-national border effects are especially sizeable: firms located in the home region of the tendering authority are about 1300 times more likely to be awarded a contract than foreign firms. Our results hold for goods, services, and construction works procurement and cannot be explained by common currency, same language, and variables capturing cultural distance.

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