Do Information Frictions and Corruption Perceptions Kill Competition? A Field Experiment on Public Procurement in Uganda

By Emanuele Colonnelli, Francesco Loiacono, Edwin Muhumuza, Edoardo Teso

We study whether information frictions and corruption perceptions deter firms from doing business with the government. We conduct two randomized controlled trials (RCTs) in collaboration with the public procurement and anti-corruption agency in Uganda. The first RCT provides firms with direct and timely access to information about government tenders over a two-year period. The second RCT provides firms with access to structured information on anti-corruption audits and on other firms’ perceptions about public entities’ integrity. We find that increasing information on available procurement opportunities alone does not increase firm participation in public procurement. However, addressing firms’ misperceptions about the integrity of public entities increases firms’ total number of bids and total government contracts won. Our findings point to the limits of transparency reforms that aim to increase competition in public procurement without accounting for firms’ perceptions about government corruption and inefficiency.