Implications of Third Parties for Contract Design

Marian Moszoro and Pablo Spiller

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze the implications of plausible third-party challenges to the legitimacy of a transaction for contract design. To the extent that such challenges impose reputation and transaction costs, the scrutinized agent has an incentive to choose contractual procedures that make challenges less likely to succeed at court, thereby discouraging the filing of challenges in the first place. The added contractual proceduralization, in turn, create adaptation costs for both the agent and the contractor which are externalized to the principals, making the transaction allegedly inefficient. This setup is of particular relevance in public procurement, where interested third parties---political opponents, excluded bidders, and watchdogs---are always present due to the nature of the transaction.

Keywords: Transaction Costs; Bureaucracy; Positive Policy Analysis; Procurement Governance (search for similar items in EconPapers)
JEL-codes: D23 D73 D78 G34 H57 (search for similar items in EconPapers)
Date: 2018-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Economia e Politica Industriale: Journal of Industrial and Business Economics 1.45(2018): pp. 5-16

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/102695/1/MPRA_paper_102695.pdf original version (application/pdf)

Related works:
Journal Article: Implications of Third Parties for Contract Design (2018)
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:pra:mprapa:102695

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().