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Active and passive waste in government spending: evidence from a policy experiment

Bandiera, Oriana, Prat, Andrea and Valletti, Tommaso (2009) Active and passive waste in government spending: evidence from a policy experiment. American Economic Review, 99 (4). pp. 1278-1308. ISSN 0002-8282

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Abstract

We propose a distinction between active and passive waste as determinants of the cost of public services. Active waste entails utility for the public decision maker, whereas passive waste does not. We analyze purchases of standardized goods by Italian public bodies and exploit a policy experiment associated with a national procurement agency. We find that: (i) some public bodies pay systematically more than others for equivalent goods; (ii) differences are correlated with governance structure; (iii) the variation in prices is principally due to variation in passive rather than active waste; and (iv) passive waste accounts for 83 percent of total estimated waste.

Item Type: Article
Official URL: http://www.aeaweb.org/aer/index.php
Additional Information: © 2009 American Economic Association
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Journal of Economic Literature Classification System: H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government
H - Public Economics > H5 - National Government Expenditures and Related Policies > H57 - Procurement
H - Public Economics > H8 - Miscellaneous Issues > H83 - Public Administration
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 28 Mar 2011 13:22
URL: http://eprints.lse.ac.uk/33672/

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