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When the purchasing officer looks the other way: on the waste effects of debauched local environment in public works execution

  • Calogero GuccioEmail author
  • Domenico Lisi
  • Ilde Rizzo
Original Paper
  • 12 Downloads

Abstract

There is extensive evidence on waste effects of environmental corruption in public works procurement. However, corruption is not the only source of waste. In this paper, we adopt a wider perspective and look at the environmental institutional quality, identifying the channels through which it can lead to different types of waste in public works execution. We firstly provide some empirical evidence on public works contracts managed by a large sample of Italian municipalities, showing that performance measures of public works execution are associated with the quality of local institutional environment in which they are executed. Motivated by this evidence, we develop a model where weak institutions entail low accountability of purchasing officers, thus they have low incentives to pursue the mandated task of monitoring the execution of contracts, even if no bribery occurs. Then, we assume that endemic environmental corruption increases the return of managerial effort devoted to rent-seeking activities for getting cost overruns, leading the contractor to divert effort from the productive activity. Overall, our model predictions conform well with the empirical evidence on Italian public works execution.

Keywords

Procurement Public works Accountability Corruption Bureaucracy Efficiency 

JEL Classification

D73 H57 K42 

Notes

Acknowledgements

We would like to thank Toke Aidt, Arye L. Hillman and Isidoro Mazza for valuable suggestions and discussions. We wish also to thank two anonymous referees for their careful review, and the editor, professor Marko Koethenbuerger, for his helpful advices. The usual disclaimers apply.

Supplementary material

10101_2019_223_MOESM1_ESM.docx (86 kb)
Supplementary material 1 (DOCX 85 kb)

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Economics and BusinessUniversity of CataniaCataniaItaly

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