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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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We document border effects in the award of public contracts in the European Single Market. Cross-national border effects are very sizable, even after controlling for currency, cultural differences, and other variables: "local" bidders are over 900 times more likely to be awarded a contract than "foreign" bidders. More surprisingly, we find substantial cross-regional border effects within countries. Border effects exist for all types of goods and services. While we find evidence that already firms' bidding decisions are subject to border effects, we cannot exclude a home bias of contracting authorities in the award of public contracts.

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