Comments by Sylvain Chassang on paper "The Value of Revolving Doors in Brazilian Public Procurement" presented by Stephane Straub at the SITE Corruption Conference, 31 August 2015. Find more at: https://www.hhs.se/site

1. The Value of Revolving Doors in Brazilian
Public Procurement
by Klenio Barbosa and Stephane Straub

2. Questions and Data
Paper still in its early stages, but clearly big question and
amazing data
The Question
How does the possibility of a revolving door affect the
effectiveness of procurement
The Data
Procurement and employment panel, 1998 to 2009
2,332,715 contracts; 1,647,105 different products;
40,474 firms and 972 administration
Use future/past employment status, prices and quantities
Q: other covariates available? Salaries, tenure, taxes...

3. Questions and Data
Paper still in its early stages, but clearly big question and
amazing data
The Question
How does the possibility of a revolving door affect the
effectiveness of procurement
The Data
Procurement and employment panel, 1998 to 2009
2,332,715 contracts; 1,647,105 different products;
40,474 firms and 972 administration
Use future/past employment status, prices and quantities
Q: other covariates available? Salaries, tenure, taxes...

4. Questions and Data
Paper still in its early stages, but clearly big question and
amazing data
The Question
How does the possibility of a revolving door affect the
effectiveness of procurement
The Data
Procurement and employment panel, 1998 to 2009
2,332,715 contracts; 1,647,105 different products;
40,474 firms and 972 administration
Use future/past employment status, prices and quantities
Q: other covariates available? Salaries, tenure, taxes...

5. The Institutional Environment
Large projects run open auctions, small projects can run
invited auctions
Allocation made on the basis of both price and subjective
quality assessment
Q: Is this observed in the data?
Can one test in which auctions conflicted parties have an
effect?
Switching behavior:
DRijkt = 1{individual i employed in admin k at t,
switched to firm j after t}
.66% of administration – auction participants pairs (?)

6. The Institutional Environment
Large projects run open auctions, small projects can run
invited auctions
Allocation made on the basis of both price and subjective
quality assessment
Q: Is this observed in the data?
Can one test in which auctions conflicted parties have an
effect?
Switching behavior:
DRijkt = 1{individual i employed in admin k at t,
switched to firm j after t}
.66% of administration – auction participants pairs (?)

7. The Institutional Environment
Large projects run open auctions, small projects can run
invited auctions
Allocation made on the basis of both price and subjective
quality assessment
Q: Is this observed in the data?
Can one test in which auctions conflicted parties have an
effect?
Switching behavior:
DRijkt = 1{individual i employed in admin k at t,
switched to firm j after t}
.66% of administration – auction participants pairs (?)

8. The Institutional Environment
Large projects run open auctions, small projects can run
invited auctions
Allocation made on the basis of both price and subjective
quality assessment
Q: Is this observed in the data?
Can one test in which auctions conflicted parties have an
effect?
Switching behavior:
DRijkt = 1{individual i employed in admin k at t,
switched to firm j after t}
.66% of administration – auction participants pairs (?)

9. The Model
single supplier, with cost c ∈ {c, c}
given consumption q, official salary s, transfer t and cost c,
planner gets payoff
S(q) − λ(s + t) − cq
public official observes cost with probability α (hard
evidence); can transmit evidence or not
Assumption 1.
if no information transmitted by public official, goods are
procured using optimal mechanism menu {(q, t), (q, t)}

10. The Model
single supplier, with cost c ∈ {c, c}
given consumption q, official salary s, transfer t and cost c,
planner gets payoff
S(q) − λ(s + t) − cq
public official observes cost with probability α (hard
evidence); can transmit evidence or not
Assumption 1.
if no information transmitted by public official, goods are
procured using optimal mechanism menu {(q, t), (q, t)}

11. Reduced form effect of revolving doors
Anticipation of revolving door affects α:
α (skill signaling)
α (complacency)
Intuitively α brings closer to efficient case
removes q distortion on c type; removes rents on c type
(higher quantity; lower price)

12. Reduced form effect of revolving doors
Anticipation of revolving door affects α:
α (skill signaling)
α (complacency)
Intuitively α brings closer to efficient case
removes q distortion on c type; removes rents on c type
(higher quantity; lower price)

13. Empirical Results

14. Questions
More info
magnitude; effect on big supply project
heterogeneity in firm/individual effects (corruptible guys,
corrupt firms)
collusion?
Interpretation
Revolving door good?
Could firms be buying out the incorruptible ones?
Other measures of honesty? Measure expectations of
revolving door?

15. Questions
More info
magnitude; effect on big supply project
heterogeneity in firm/individual effects (corruptible guys,
corrupt firms)
collusion?
Interpretation
Revolving door good?
Could firms be buying out the incorruptible ones?
Other measures of honesty? Measure expectations of
revolving door?