Intermunicipal cooperation in public procurement

Abstract

This study evaluates the impact of intermunicipal cooperation on public procurement (PP) performance, based on the Italian experience. We use both a fixed-effects regression model and alternative matching estimators to analyse a sample of 50,905 Italian public works contracts awarded by municipalities and municipal unions (MUs) between 2012 and 2020. Our results indicate that while local centralisation does not necessarily lead to significant cost savings in the procurement phase, MUs outperform individual municipalities in the execution phase, especially in terms of reducing delivery delays. We conclude that while MUs do not necessarily lead to strong economies of scale, they do improve efficiency during contract execution. This highlights the alternative benefits of PP centralisation beyond cost savings.