Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
NBER Working Papers and Publications
|October 2018||The Impact of Industry Consolidation on Government Procurement: Evidence from Department of Defense Contracting|
with Mark Duggan: w25160
We study the relationship between market structure and public procurement outcomes. In particular, we ask whether and to what extent consolidation-driven increases in industry concentration affect the way in which the government procures its goods and services. We focus on the defense industry, by far the largest contributor to federal procurement spending in the U.S. This industry experienced a sharp increase in the level of concentration during the 1990s, driven by a series of large mergers between defense contractors. Using detailed microdata on Department of Defense (DoD) contract awards, we estimate the causal effect of industry concentration on a series of procurement outcomes, leveraging the differential impact of these mergers across product markets. We find that market concentrati...