Matilde Cappelletti (ZEW – Leibniz Centre for European Economic Research) 13.3.2025

It is our pleasure that Matilde Cappelletti (ZEW – Leibniz Centre for European Economic Research)  will present on Thursday, March 13, 2025, at 12:45 in room RB437 about the topic “Targeted Bidders in Government Tenders”.

Registration is not required and anyone who would like to attend is warmly invited.

It is also possible to participate online via MS Teams at this link. In case of any connection issues, please contact lubomir.cingl@vse.cz.

ABSTRACT: A set-aside promotes a more equitable procurement process by restricting participation in government tenders to small or disadvantaged businesses. Yet its micro-effects on tender outcomes (competition and contract efficiency) and targeted firm performance entail trade-offs, which we evaluate empirically using a decade of US federal procurement data. At the tender level, we employ a two-stage approach. First, we use random forest techniques to compute the propensity score for a tender being set aside based on rules implementation. Second, we employ the scores in an inverse probability weighting framework. We find that set-asides prompt more competition—implying that the rise in participation of targeted firms more than offsets the exclusion of untargeted ones—and inefficiency, measured by cost overruns and delays. We argue that adverse selection and moral hazard are mechanisms behind contract inefficiency. We then study the targeted firm behavior to uncover whether long-run benefits mitigate short-run drawbacks. We compare businesses differentially exposed to a set-aside spending shock through an event study framework. We find mixed evidence on firm growth.

BIO: Matilde Cappelletti is a PhD Candidate in Economics at the University of Mannheim and a Researcher at the ZEW Mannheim. She is an empirical microeconomist and she is am interested in topics in health economics, public economics, and industrial organization.  In her research, she studies how government spending and regulations affect households and firms.