https://doi.org/10.1140/epjds/s13688-025-00543-z
Research
High earnings through firm influence: the role of hierarchical structures in public procurement
1
NOVA Information Management School (NOVA IMS), Universidade Nova de Lisboa, Lisbon, Portugal
2
Computational Research in Social Science Laboratory, School of Engineering and School of Government, Universidad del Desarrollo, Santiago, Chile
3
Instituto de Data Science, Facultad de Ingeniería, Universidad del Desarrollo, Santiago, Chile
4
Centro de Investigación en Complejidad Social, Facultad de Gobierno, Universidad del Desarrollo, Santiago, Chile
5
Northwestern Institute on Complex Systems, Kellogg School of Management, Northwestern University, Evanston, United States
Received:
19
February
2024
Accepted:
19
March
2025
Published online:
31
March
2025
Public procurement, a critical but often overlooked aspect of governance, plays a pivotal role in steering the acquisition of goods, services and the commissioning of public works. Our study, analyzing over one million public procurement contracts from the Portuguese public administration, applies network science to unravel the complexities of this market. We uncover a market characterized by highly modular and hierarchical networks, with notable service specialization, regional diversity, and entity diversification. Our findings reveal a clear pattern: firms occupying influential positions within the networks consistently achieve higher earnings per bid. This disparity in earnings indicates a market where competition is constrained and entry barriers for new firms are high. Similarly, markets in the Portuguese public procurement system exhibit high levels of concentration, which raises both integrity and supplier risks that should be monitored by policymakers. The empirical framework developed in this article contributes to a growing body of literature that analyzes the levels of competition in public procurement systems. The network-based method applied here facilitates the analysis of firms’ positioning within their network of competitors and helps to quantify firm capabilities in a way that moves beyond a monolithic view of firm size and market power.
Key words: Public Procurement / Tenders / Market Organization / Network Analysis / Competition / Complexity
Supplementary Information The online version contains supplementary material available at https://doi.org/10.1140/epjds/s13688-025-00543-z.
© The Author(s) 2025
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