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Rigidity of Public Contracts

Marian Moszoro, Pablo Spiller and Sebastian Stolorz

Journal of Empirical Legal Studies, 2016, vol. 13, issue 3, 396-427

Abstract: We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call “public contracts”) with contracts between nongovernmental entities. We show that public contracts are lengthier and have more rule‐based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents to lower the likelihood of success of politically‐motivated challenges from opportunistic third parties.

Date: 2016
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Citations: View citations in EconPapers (6)

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https://doi.org/10.1111/jels.12119

Related works:
Working Paper: Rigidity of Public Contracts (2016) Downloads
Working Paper: Rigidity of Public Contracts (2015) Downloads
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