Hans Hvide, Tom G. Meling, 16 December 2019

Successfully predicting which startups will thrive has long bedevilled economists. Using data from procurement auctions in Norway, this column finds that temporary demand shocks have long-term effects: startups that win a procurement auction are 20% larger than the runners-up, even years after the contract work has ended. In terms of job creation and sales growth, winning a procurement auction seems to have much larger effects for startups than for mature firms, which suggests the potential value in public policies that promote startups’ participation in government procurement auctions.

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