Abstract
This paper aims to disentangle the roles of information frictions and career incentives of local officials in the allocation of government contracts. Drawing on a unique dataset including both winning and losing bidders of public procurement auctions in China, we document a strong local bias in the contract allocation. These patterns are hardly reconciled with explanations rooted in information frictions or corruption. Instead, we highlight the role of local leaders’ career incentives, presenting evidence that local favoritism is more pronounced in localities with more incentivized mayors. Our findings prompt a reconsideration of the effectiveness of bureaucratic discretion in allocating public resources. (JEL H57, H77, H72, D73, R51)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
