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

We study whether information frictions and corruption perceptions deter firms from doing business with the government. We conduct two nationwide randomized con- trolled trials (RCTs) in collaboration with the national anti-corruption and public procurement supervisory agency in Uganda.The first RCT aims to increase transparency on available procurement opportunities. We provide firms with direct and timely access to information about government tenders over a two-year period, approximating the existence of a centralized portal for tender notices typical of e-procurement reforms. The second RCT additionally addresses misperceptions about the integrity of government entities by giving firms access to structured information on other firms’ perceptions and on anticorruption audits. We find that increasing transparency about tenders alone does not increase firm participation in public procurement. However, correcting firms’ perceptions about the integrity of public entities increases firms’ total number of bids and total government contracts won. Overall, our findings point to the limits of transparency reforms that aim to increase competition in public procurement without also accounting for firms’ perceptions about government corruption and inefficiency.