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https://github.com/marek-chadim/markups-and-public-procurement

Bachelor’s Thesis, currently a Working Paper
https://github.com/marek-chadim/markups-and-public-procurement

czech-republic econometric-analysis industrial-organization markups production-function-estimation public-procurement

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Bachelor’s Thesis, currently a Working Paper

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README 

        

# Markups and Public Procurement

  

### References: 

- DLW 2012 [Markups and Firm-Level Export Status](https://www.aeaweb.org/articles?id=10.1257/aer.102.6.2437)

- DLEU 2020 [The Rise of Market Power and the Macroeconomic Implications](https://academic.oup.com/qje/article/135/2/561/5714769?login=true)

- Imbens, G. and Xu, Y. (2024). [Lalonde (1986) after nearly four decades: Lessons learned](https://arxiv.org/abs/2406.00827). 

- Arkhangelsky, D. and Imbens, G. (2024). [Causal models for longitudinal and panel data: a survey](https://arxiv.org/abs/2311.15458).



## Master Thesis 

I aim to address selection bias in the average comparisons between private-sector-only

firms and government contractors. First, I assume that selection depends only on observable lagged

outcomes and pre-treatment covariates, within a trimmed sample with sufficient overlap in the

propensity score. Second, I control unobservable time-invariant confounders using recent causal panel

data methods. My analysis demonstrates a declining trend in the treatment effect for government

contractors, offering empirical evidence in favor of reforms aimed at curbing single-bidding practices and

reducing political favoritism in public procurement in the Czech Republic. 





  

   

  

   

  




###  Submission: [The Young Economist Award of the Czech Economic Society](https://cse.cz/en/page/31st-young-economist-of-the-year-award)



Abstract:



I document the evolution of market power using firm-level data from the Czech construction

sector since 2006. Contrary to the global trend of rising markups, I find that aggregate markups

have decreased, declining from 40% above marginal cost in 2006 to 30% in 2021, driven primarily by firms in the upper tail of the markup distribution. By linking this data with government tenders, I examine the relationship between markups and public procurement. I find that

markups are significantly higher when controlling for unobserved productivity; government

contractors have price-to-marginal-cost ratios that are 0.3 higher than those of private-sector

firms; and firm-level markups increase by 12% upon a firm’s entry into public procurement.





   

   

   

  

  

   




### Bachelor's thesis, Charles University in Prague. DOI: [dspace.cuni.cz](https://dspace.cuni.cz/handle/20.500.11956/184831#xmluiArtifactToplinksNavigationhead_all_of_dspace_links)



For my undergraduate thesis, I estimated production functions for firms in the Czech construction sector, addressing

endogeneity in productivity shocks and variable input usage using the control function approach and

GMM. A key contribution of this work was the creation of a novel dataset as well as the structural

inference of the markup distribution.