Does Warranty Provision Affect Outcomes of Russian Public Procurement Auctions?

This paper studies the influence of discretionary warranty provision requirements introduced on 01.07.2019 for the winners of procurement purchases by public bodies regulated by Federal Law 44-FZ after the amendment of the law with the concept of "warranty obligations". We attempt to identify the effect of warranties on entry, competition and contract price related measures. To identify these effects we use OLS and fixed effects regressions with customer fixed effects, time fixed effects and goods fixed effects included in the identification. Using the data on 241235 Moscow electronic procurement auctions held from January 2017 to November 2020, we show that inclusion of warranties (as percentage of reserve spending) decreases number of applicants per contract, while increasing probability of a given auction to be characterised by zero bids or just one bid and increasing logarithm of the final contract spending, as compared to no-warranty case. The evidence of statistically significant relationships is provided. Effects of various warranty size clusters are also detailed.