Renegotiation of Public Contracts: An Empirical Analysis

Economic Letters, Vol. 132, pp. 77-81, 2015

14 Pages Posted: 5 Nov 2019

See all articles by Francesco Decarolis

Francesco Decarolis

Bocconi University - Department of Economics

Giuliana Palumbo

Bank of Italy

Date Written: July 2015

Abstract

We exploit a large dataset of contracts for public works awarded in Italy between 2000 and 2007 to document two empirical facts about time and cost renegotiations. First, although both types of renegotiations are systematic, their correlation is nearly zero. Second, several factors typically suggested to explain renegotiations have different, and in certain cases opposite, effects on price and time renegotiations. Moreover, the estimates confirm that, as suggested by the literature, the type of awarding procedures and the complexity of the job are associated with renegotiations, but they also provide evidence in favor of an important role for the linkage between the project design stage and renegotiations during the project execution.

Keywords: Procurement, Auctions, Renegotiations, Delays, Overruns

JEL Classification: L22, L74, D44, D82, H57

Suggested Citation

Decarolis, Francesco and Palumbo, Giuliana, Renegotiation of Public Contracts: An Empirical Analysis (July 2015). Economic Letters, Vol. 132, pp. 77-81, 2015 , Available at SSRN: https://ssrn.com/abstract=3475626 or http://dx.doi.org/10.2139/ssrn.3475626

Francesco Decarolis (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Giuliana Palumbo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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