EconPapers    
Economics at your fingertips  
 

The cost of contract renegotiation: Evidence from the local public sector

Philippe Gagnepain (), Marc Ivaldi () and David Martimort ()

PSE - Labex "OSE-Ouvrir la Science Economique" from HAL

Abstract: Economic theory claims that contracts renegotiation prevents from reaching the informationally constrained efficient solution that could have been obtained under full commitment. Assessing the cost of renegotiation compared to the full commitment scenario still remains an open issue from an empirical viewpoint. To address this question, we fit a structural principal-agent model with renegotiation on a set of contracts for urban transport services. The model captures two important features of the industry. First, only two types of contracts are used in practice (fixed-price and cost-plus). Second, subsidies are greater when a cost-plus contract was signed earlier on than following a fixed-price contract. We then compare a scenario with renegotiation and a hypothetical situation with full commitment. We conclude that the welfare gains from improving commitment would be significant but would accrue mostly to operators.

New Economics Papers: this item is included in nep-cta and nep-tre
Date: 2013
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00710639
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Published in American Economic Review, American Economic Association, 2013, 103 (6), pp.2352-2383. ⟨10.1257/aer.103.6.2352⟩

Downloads: (external link)
https://hal.archives-ouvertes.fr/hal-00710639/document (application/pdf)

Related works:
Journal Article: The Cost of Contract Renegotiation: Evidence from the Local Public Sector (2013) Downloads
Working Paper: The cost of contract renegotiation: Evidence from the local public sector (2010) Downloads
Working Paper: The Cost of Contract Renegotiation: Evidence from the Local Public Sector (2010) Downloads
Working Paper: The Cost of Contract Renegotiation: Evidence from the Local Public Sector (2010) Downloads
Working Paper: The Cost of contract renegotiation: evidence from the local public sector (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:pseose:hal-00710639

Access Statistics for this paper

More papers in PSE - Labex "OSE-Ouvrir la Science Economique" from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2019-10-15
Handle: RePEc:hal:pseose:hal-00710639