Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 1034: Small fish in a big (local) pond: EU directives, market concentration, and SME success in public procurement

Samielle Drake ()
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Samielle Drake: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden

Abstract: This study examines the impact of local market concentration on the participation and success of small and medium enterprises (SMEs) in Swedish municipal cleaning service procurement auctions. A 10 percentage point reduction in the joint market share of the four largest firms (CR4), while maintaining a constant Herfindahl-Hirschman Index (HHI), results in a 7.5% increase in SME participation and raises the likelihood of an SME winning by 2.4%. Furthermore, the 2014 revisions to the EU public procurement directives mitigated the adverse effects of market concentration. However, despite the increase in participation, there is no evidence that the success rates of SMEs improved following the implementation of the revised EU directives.

Keywords: Public Procurement; Market Concentration; SMEs; Competition; Regulations

JEL-codes: D44; H57; L13; L33

Language: English

25 pages, March 11, 2025

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