Court Efficiency and Procurement Performance

Decio Coviello, Luigi Moretti, Spagnolo Giancarlo and Paola Valbonesi
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Decio Coviello: HEC Montréal - HEC Montréal
Spagnolo Giancarlo: CEPR - Center for Economic Policy Research, SSE - Stockholm School of Economics

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Abstract: 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: Public procurement; Court efficiency; Enforcement cost (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (21)

Published in Scandinavian Journal of Economics, 2018, 120 (3), pp.826-858. ⟨10.1111/sjoe.12225⟩

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Related works:
Journal Article: Court Efficiency and Procurement Performance (2018)
Working Paper: Court Efficiency and Procurement Performance (2018)
Working Paper: Court Efficiency and Procurement Performance (2016)
Working Paper: Court Efficiency and Procurement Performance (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01476673

DOI: 10.1111/sjoe.12225

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