Working Papers¶
Bitter Pills: Judicial Enforcement and the Cost of Public Procurement in Brazil¶
with Paulo Furquim de Azevedo (updated May, 2026 — v7 r2-round1, three-channel decomposition rewrite, JPubE Short Paper format) | PDF
Abstract
Judicial enforcement is essential for the rule of law, yet the design of enforcement can generate economic inefficiency. We provide the first quantitative decomposition of the procurement cost of judicial enforcement, using bid-level data on court-mandated pharmaceutical procurement in Sao Paulo, Brazil (2009--2019). With item, time, and buyer fixed effects, court orders raise prices by 5.4% and reduce bidder participation by 5.4%. To isolate the role of personal sanctions specifically, we exploit an institutional feature unique to Sao Paulo since 2009: a parallel administrative-request channel that shares all planning constraints of court-mandated procurement but carries no penalty for officials when delivery fails. The "under the gun" comparison between litigated and administrative urgent purchases of the same item yields a 23--30% cost gap. Decomposing this umbrella into its underlying channels, we find that demand fragmentation---smaller orders that forgo bulk discounts---accounts for essentially all of the under-the-gun gap and roughly half of the urgency premium across the full sample; reduced bidder participation, even at identical order size, accounts for most of the rest; and a within-firm markup under urgency is not what we find. The findings speak to a general asymmetry in accountability design: when non-completion is punished more severely than overpayment, compliance crowds out cost-efficiency.
Media coverage
Sheltered Bidding: The Within-Auction Cost of SME Set-Asides¶
(updated May, 2026 — v6 reproducibility refactor, submission-ready, JPubE format) | PDF | Online appendix | Highlights
Abstract
Why do SME set-asides raise procurement prices? Two non-exclusive mechanisms operate: the bidder pool shrinks, and the auction clears at a different point in the surviving cost distribution. This paper estimates the total impact and decomposes it into these two channels. A March 2018 reversal extended an SME-only rule to medical supplies on São Paulo's centralized procurement platform; a difference-in-differences against 76 never-treated product groups recovers a roughly 10 percent rise in winning prices and a doubling of SME participation. An asymmetric IPV model identified from Pregão drop-out bids then separates the channels under observed equilibrium entry---a policy-relevant accounting decomposition identified by the auction format plus observed entry, not a full structural entry equilibrium. The within-auction component---sheltered bidding---accounts for two-thirds to three-quarters of the simulated effect across classes. The implied welfare cost reaches R$\,55 million per year on a single product group of São Paulo's R$\,13 billion platform. A 10 percent price preference welfare-dominates the set-aside in thick standardized markets at near-zero fiscal cost; the ranking turns conditional in thin pharmaceutical markets, where the equilibrium-selection treatment of the protected pool becomes first-order. The conditional ranking is the policy-design statement: bidder exclusion is hardest to defend where the protected pool is thick and the good standardized, and most defensible---if at all---where it is not.
Media coverage
Cheap Signals, Costly Proof: Award-Layer Triage for Cartel Enforcement¶
with Paulo Furquim de Azevedo (updated May, 2026) | PDF | Online appendix
Abstract
Can cheap data triage cartel investigations before costly forensics? Most antitrust enforcers see who won a public contract and at what price---not what every bidder offered. This thinner data is enough to flag which firms warrant costly forensic investigation. Our architecture sequences an award-layer screening stage before a costly bid-layer forensic stage, instantiated with a frequent-loser flag on São Paulo's BEC (2009--2019). The flag cuts the forensic stage's bid-microdata pool by 83% while still flagging two-thirds of adjudicated cartel cobidders. On the same data, it matches the seven-feature Imhof--Wallimann bid-distribution pipeline that requires bid microdata, adding non-redundant signal in combination. The discrimination is out-of-sample: built on 2009--2016 participation only, the screen prospectively flags adjudicated cobidders in 2017--2019. The screen triages; it does not adjudicate cartel membership. A simple separating-equilibrium argument motivates endogenous loser-side participation as the ranking primitive. Wherever award records are routinely available while bid microdata are forensic-recoverable, screening should be sequenced before forensics.