Rigidity in public contracts: Implications for renewal dynamics

Marian Moszoro, Stéphane Saussier and Jean Beuve ()
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Stéphane Saussier: LAB IAE Paris - Sorbonne - IAE Paris - Sorbonne Business School
Jean Beuve: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique

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Abstract: We investigate how the rigidity of public contracts influences the frequency of their renewal. Using a dataset of contracts for public–private car parks and employing machine-reading techniques to assess contract rigidity, we find that heightened contract rigidity, particularly in litigation clauses, significantly raises the probability of contract renewal. Our findings indicate that procedural sunk costs and the competitive advantage conferred to incumbents by contract rigidity are key factors contributing to more frequent renewals. This study enhances our comprehension of public contract renewals by emphasizing the significance of political contestability and rigidity, providing valuable insights into optimal strategies for contract renegotiation.

Keywords: Public procurement; Contract rigidity; Renewals; Renegotiations (search for similar items in EconPapers)
Date: 2024-12
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Published in Quarterly Review of Economics and Finance, 2024, 98, pp.101924. ⟨10.1016/j.qref.2024.101924⟩

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Related works:
Working Paper: Rigidity in public contracts: Implications for renewal dynamics (2024)
Working Paper: Rigidity in public contracts: Implications for renewal dynamics (2024)
Working Paper: Rigidity in public contracts: Implications for renewal dynamics (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04714341

DOI: 10.1016/j.qref.2024.101924

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