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Court Efficiency and Procurement Performance

Decio Coviello, Luigi Moretti, Giancarlo Spagnolo and Paola Valbonesi ()
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Decio Coviello: University of Montreal

No 164, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: Disputes on the penalties enforceable for breach of contract are often solved in court. Using a large dataset on Italian public procurement contracts, we study the effects of the inefficiency of the local law courts on the delay with which contractors deliver public works. First we sketch a simple model to see how inefficient law courts - i.e. those characterized by longer average duration of trials - may induce public buyers to refrain from enforcing penalties for late delivery in order to avoid costly disputes in court. Then our empirical findings show that, where the local law courts are inefficient: i) public works are delivered with longer delays, and this applies particularly to higher-value contracts - i.e. complex projects; ii) contracts are more often awarded to larger firms; and iii) on average, a higher share of final payment in contracts is adopted. These results are not driven by omitted environmental variables, since we show that delays in the completion of contracted works are still a selected by the efficiency of the local law courts after including province-related fixed effects in the model and considering other possible explanations for our findings.

Keywords: "efficiency" of the law courts; enforcement of contract obligations; public procurement contracts; time incentives. (search for similar items in EconPapers)
JEL-codes: H57 L33 K41 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2013-06
New Economics Papers: this item is included in nep-law and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

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https://economia.unipd.it/sites/economia.unipd.it/files/20130164.pdf (application/pdf)

Related works:
Journal Article: Court Efficiency and Procurement Performance (2018) Downloads
Working Paper: Court Efficiency and Procurement Performance (2018)
Working Paper: Court Efficiency and Procurement Performance (2018)
Working Paper: Court Efficiency and Procurement Performance (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0164

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