Public Procurement in Law and Practice

We examine a new dataset of public procurement laws, practice, and outcomes in 187 countries. measure regulation as restrictions on the discretion procuring entities. find that laws practice are highly correlated with each other across countries, better is outcomes, but themselves not outcomes. A closer look shows stricter correlate improved only countries low sector capacity. present model which both regulatory rules capacity determine In model, effective capacity, high because it inhibits socially optimal exercise to exclude quality bidders. (JEL D73, H11, H57, K12, K42, O17)