Centralized Procurement and Delivery Times: Evidence from a Natural Experiment in Italy

Abstract

We study how prices and delivery times respond to the statutory centralization of procurement. Our data set contains information on each purchase order of stan- dardized medical devices by all the hospitals in one Italian region. We estimate the effects of centralization in a difference-in-differences design leveraging the stag- gered implementation of the statutory centralization for a sub-set of medical devices. We document that centralization generated a trade-o between prices and delivery times. Centralized medical devices are 15% less expensive, but are delivered with slightly longer (20%) waiting time, compared to non-centralized devices. To learn more about the mechanism we match purchase orders with contract level data, and nd that the reduction in prices might be associated to bulk purchasing from a limited sub-set of suppliers.