Rigidity of Public Contracts

Marian Moszoro, Pablo Spiller and Sebastian Stolorz

MPRA Paper from University Library of Munich, Germany

Abstract: We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call "public contracts") with contracts between non-governmental entities. We show that public contracts are lengthier and have more rule-based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents to lower the likelihood of success of politically motivated challenges from opportunistic third parties.

Keywords: Transaction Costs; Public Contracting and Procurement; Political Economy; Regulated Industries (search for similar items in EconPapers)
JEL-codes: D23 D73 D78 H57 K23 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published in Journal of Empirical Legal Studies 3.13(2016): pp. 396-427

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https://mpra.ub.uni-muenchen.de/101575/1/MPRA_paper_101575.pdf original version (application/pdf)

Related works:
Journal Article: Rigidity of Public Contracts (2016)
Working Paper: Rigidity of Public Contracts (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101575

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