Court Efficiency and Procurement Performance
Giancarlo Spagnolo and
Paola Valbonesi ()
No 11426, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Disputes over penalties for breaching a contract are often resolved in court. A simple model illustrates how inefficient courts can sway public buyers from enforcing a penalty for late delivery in order to avoid litigation, therefore inducing sellers to delay contract delivery. By using a large dataset on Italian public procurement, we empirically study the effects of court inefficiency on public work performance. We find that where courts are inefficient: i) public works are delivered with longer delays; ii) delays increase for more valuable contracts; iii) contracts are more often awarded to larger suppliers; and iv) a higher share of the payment is postponed after delivery. Other interpretations receive less support from the data.
Keywords: Court efficiency; public procurement; time incentives; performance in contract execution; delay; litigation; enforcement cost. (search for similar items in EconPapers)
JEL-codes: H41 H57 K41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-eur, nep-hrm and nep-law
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Working Paper: Court Efficiency and Procurement Performance (2017)
Working Paper: Court Efficiency and Procurement Performance (2013)
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