Munich Personal RePEc Archive

Political Contestability and Public Contracting

Moszoro, Marian and Spiller, Pablo (2019): Political Contestability and Public Contracting. Published in: Journal of Public Economic Theory , Vol. 21, No. 5 (October 2019): pp. 945-966.

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Do public agents undertake socially inefficient activities to protect themselves? In politically contestable markets, part of the lack of flexibility in the design and implementation of the public procurement process reflects public agents' risk adaptations to limit the political hazards from opportunistic third parties---political opponents, competitors, and interest groups. Reduced flexibility limits the likelihood of opportunistic challenges, while externalizing the associated adaptation costs to the public at large. We study this matter and provide a comprehensive theoretical framework with empirically testable predictions.

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