Political Contestability and Public Contract Rigidity: An Analysis of Procurement Contracts

Beuve, Jean and Moszoro, Marian and Saussier, Stéphane (2019): Political Contestability and Public Contract Rigidity: An Analysis of Procurement Contracts. Published in: Journal of Economics & Management Strategy , Vol. 28, No. 2 (April 2019): pp. 316-335.

Abstract

Are public contracts less adaptable than private contracts? Using a comprehensive set of contracts for a standard product, we compare procurement contracts in which the procurer is either a public administration or a private corporation. We find that public-to-private contracts feature more rigidity clauses than private-to-private contracts and that the use of rigidity clauses in public contracts rises when political risks are more salient. We argue that a significant part of the increased rigidity of public contracts is a contractual adaptation to limit political hazards from political opponents and interested third parties.

• Item Type: MPRA Paper
• Language: English
• Keywords: Procurement, Political Contestability, Contractual Rigidity
• Subjects: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation; H - Public Economics > H5 - National Government Expenditures and Related Policies > H57 - Procurement

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