Mihaly Fazekas publishes paper in Public Choice

November 13, 2023

DPP Associate Professor Mihály Fazekas published a paper in Public Choice, co-authored with Emmanuel Wittberg. The article looks at whether corruption risks in public procurement impact the profitability of firms in the Swedish construction industry. Unlike previous studies linking corruption and firm performance in high corruption risk environments, the authors look at Sweden which is known to be clean. The authors rely on Dr Fazekas’ long-standing work on measuring the risk of corruption in public procurement across a wide range of high- and low-income countries. The empirical analysis reveals that firms winning many single bidder contracts have higher profitability than other firms in the sector: 10 percentage points higher single bidding rate firms have a 0.2–0.6-percentage-point higher sales margin. The findings underscore that public procurement corruption risks distort markets and economic incentives, and that this risk is present even in low-corruption contexts such as in Sweden.