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Political Contestability and Public Contract Rigidity

TitlePolitical Contestability and Public Contract Rigidity
Publication TypeJournal Article
Year of Publication2019
AuthorsBeuve, J., Moszoro M., and Saussier S.
Refereed DesignationRefereed
JournalJournal of Economics and Management Strategy
Date Published2019
AbstractAre public contracts less adaptable than private contracts? Using a comprehensive set of contracts for a standard product, we compare procurement contracts in which the procurer is either a public administration or a private corporation. We find that public‐to‐private contracts feature more rigidity clauses than private‐to‐private contracts and that the use of rigidity clauses in public contracts rises when political risks are more salient. We argue that a significant part of the increased rigidity of public contracts is a contractual adaptation to limit political hazards from political opponents and interested third parties.
beuve_et_al-2018-journal_of_economics_26_management_strategy.pdf294.82 KB