Short-term or long-term contracts? - A rent-seeking perspective

Oliver Gürtler ()

No 208, Discussion Papers from SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: In this paper, .rms engage in rent seeking in order to be assigned a governmental contract. We analyze how a change in the contract length a¤ects the .rms. rent-seeking behavior. A longer contract leads to more rent seeking at a contract assignment stage, as the .rms value the contract higher. On the other hand, the contract has to be assigned less often, which of course leads to less rent seeking. Finally, a longer contract makes a possible cooperation between the .rms solving the rent-seeking problem more difficult to sustain.

Keywords: Contract length; rent seeking; cooperation; relational contract (search for similar items in EconPapers)
JEL-codes: D72 D74 (search for similar items in EconPapers)

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