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Rigidity in public contracts: Implications for renewal dynamics

Author

Listed:
  • Marian Moszoro

    (International Monetary Fund (IMF), George Mason University [Fairfax])

  • Stéphane S. Saussier

    (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)

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Marian Moszoro & Stéphane S. Saussier & Jean Beuve, 2024. "Rigidity in public contracts: Implications for renewal dynamics," Post-Print hal-04979096, HAL.
    • Handle: RePEc:hal:journl:hal-04979096
    DOI: 10.1016/j.qref.2024.101924
    as

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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