One of our lead researchers Davide Vannoni published together with his colleague Simona Baldi an interesting article related to SPP in 2015. The paper “The Impact of Centralization, Corruption and Institutional Quality on Procurement Prices: An Application to Pharmaceutical Purchasing in Italy” is part of a working paper series from the Department of Economics and Statistics at the University of Turin.

Abstract article

This paper deals with the open issue about the choice between a centralized versus a decentralized public procurement strategy. Using a unique dataset on tender prices of selected drugs for hospital usage awarded by a sample of 52 Italian local health service providers (ASLs) between 2009 and 2012, we test which procurement system (centralized, decentralized or hybrid) performs better. Controlling for several covariates, we always find that centralized and hybrid procurers pay lower prices as compared to decentralized units. Moreover, our results show that in areas in which corruption is higher or, more generally, institutional quality is lower, the effect of centralization in negotiating lower prices is much stronger, with savings that can reach also 50 percent of the price paid by ASLs that procure on their own.

The full article is now available for free download.

Davide Vannoni

Davide Vannoni is a Professor of Applied Economics at the University of Turin and is the Director of the Master Program in PP Management for Sustainable Development (University of Torino and ITC-ILO). He has worked on empirical analysis of firm for the past twenty years. He is the Vice Director of the Economics Department at the University of Turin and has served for six years as Director of the two-year Master Program in Economics. He has successfully supervised PhD students at Collegio Carlo Alberto, University of Turin, and Tilburg University.