Institutional Affiliations: SITE-Stockholm School of Economics and EIEF, University of Tor Vergata, and CEPR
|Certification, Reputation and Entry: An Empirical Analysis|
with , , : w24916
Markets with asymmetric information will often employ third-party certification labels to distinguish between higher and lower quality transactions, yet little is known about the effects of certification policies on the evolution of markets. How does the stringency in quality certification affect the intensity and composition of entry, incumbents' reactions, and market outcomes? We use detailed administrative data and exploit a policy change on eBay to explore how a more selective certification policy affects entry and behavior across a rich set of online market segments. We find that after the policy change, entry increases and does so more intensely in markets where it is harder to become certified. The average quality of entrants also increases more in the more affected markets, while t...
|Bureaucratic Competence and Procurement Outcomes|
with , , , : w24201
Does a more competent public bureaucracy contribute to better economic outcomes? We address this question in the context of the US federal procurement of services and works by combining contract-level data on procurement performance and bureau-level data on competence and workforce characteristics. Using an instrumental variable strategy, we find that an increase in bureau competence causes a significant and economically important reduction in: i) delays, ii) cost overruns, and iii) number of renegotiations. Cooperation within the office appears to be a key driver of the findings.
forthcoming at the JLEO: https://academic.oup.com/jleo
|Past Performance and Procurement Outcomes|
with , : w22814
Reputational incentives may be a powerful mechanism for improving supplier performance and limiting the perverse effect of price competition on contract execution. We analyze a unique experiment run by a large utility company in Italy which introduced a new vendor rating system scoring its suppliers' past performance and linking it to the award of future contracts. We study responses in both price and performance to the announcement of the switch from price-only to price-and-rating auctions. Average performance improves from 25 percent to 90 percent of the audited parameters. Improvements involve all parameters and suppliers, are long-lasting (for at least 10 years after the initial experiment) and are reflected in higher service quality by the utility. Contract prices do not significantly...