Essays on market structure, competition, and political connection in public procurement

This thesis spans fields of Industrial Organization, Public Economics, and Political Economy. It focuses on the performance of public procurement auctions in the unified Russian institutional setting of 2011-2019. The first chapter studies the impact of vertical integration between pharmaceutical drug producers and distributors on prices in public procurement auctions for drugs. It concludes that vertical integration is not anti-competitive in procurement markets if upstream competition is tough, but it requires special attention for concentrated upstream markets. Either the merging firms should prove substantial synergy effect, or the antitrust authority can require the mandatory sharing of production technology, generating the exogenous upstream entry. The second chapter investigates the role of tenure in office and local ties of sub-national governors in procurement contracts allocation. It shows that governors without local connections in regions demonstrate predatory behavior by restricting competition in procurement auctions. Such behavior becomes worse with tenure in office. In contrast, governors with local ties show a higher level of procurement competition and no tenure effect. The third chapter focuses on firms dynamics and studies how procurement contracts affect firms' capital structure. It shows that firms receiving public contracts issue more short-term debt. Moreover, the political connection of firms does not entirely suppress the beneficial access to debt the public contracts create.