Rigidity of Public Contracts

Journal of Empirical Legal Studies, Vol. 13, Nro. 3, pp. 396-427

42 Pages Posted: 22 Jul 2014 Last revised: 21 Jan 2017

See all articles by Marian Moszoro

Marian Moszoro

Warsaw School of Economics (SGH); International Monetary Fund (IMF); George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES)

Pablo T. Spiller

University of California, Berkeley - Business & Public Policy Group

Sebastian Stolorz

George Mason University - School of Policy, Government, and International Affairs; World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: July 21, 2016

Abstract

We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call "public contracts") with contracts between non-governmental entities. We show that public contracts are lengthier and have more rule-based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents to lower the likelihood of success of politically motivated challenges from opportunistic third parties.

Keywords: Transaction Costs, Public Contracting and Procurement, Political Economy, Regulated Industries

JEL Classification: D23, D73, D78, H57, K23

Suggested Citation

Moszoro, Marian W. and Spiller, Pablo T. and Stolorz, Sebastian, Rigidity of Public Contracts (July 21, 2016). Journal of Empirical Legal Studies, Vol. 13, Nro. 3, pp. 396-427, Available at SSRN: https://ssrn.com/abstract=2469270 or http://dx.doi.org/10.2139/ssrn.2469270

Marian W. Moszoro

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

International Monetary Fund (IMF) ( email )

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George Mason University - Department of Economics ( email )

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HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

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George Mason University
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United States

Pablo T. Spiller (Contact Author)

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
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United States
510-642-1502 (Phone)
510-642-2826 (Fax)

Sebastian Stolorz

George Mason University - School of Policy, Government, and International Affairs ( email )

Founders Hall
3351 Fairfax Dr.
Arlington, VA 22201
United States

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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