Working Paper: NBER ID: w18636
Authors: Marian W. Moszoro; Pablo T. Spiller
Abstract: The lack of flexibility in public procurement design and implementation reflects public agents' political risk adaptation to limit hazards from opportunistic third parties - political opponents, competitors, interest groups - while externalizing the associated adaptation costs to the public at large. Reduced flexibility limits the likelihood of opportunistic challenge lowering third parties' expected gains and increasing litigation costs. We provide a comprehensible theoretical framework with empirically testable predictions.
Keywords: No keywords provided
JEL Codes: D23; D72; D73; D78; H57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increasing contract specificity and rigidity (D86) | Decreased likelihood of successful third-party challenges (K16) |
| Increased contract rigidity (D86) | Higher implementation costs and final prices for public contracts (H57) |
| Higher rigidity (L15) | Higher costs (G19) |
| Higher rigidity (L15) | Lower likelihood of challenges (D81) |
| Likelihood of opportunistic challenges is convex and monotonically decreasing in contract rigidity (D86) | Decreased likelihood of opportunistic challenges (I14) |
| Increased contract rigidity (D86) | Increasing adaptation costs (Q52) |